Means-tested Pension Credit is paid out if a pensioner's income is below a certain amount.

But many pensioners miss out on the full credit entitlement because they already have savings.

The Department for Work and Pensions is now ignoring the first £10,000 of savings when calculating entitlements, which will raise thousands of payments by up to £8 a week.

Previously, only the first £6,000 of savings was ignored.

Pensions minister Angela Eagle, who visited South Tyneside last month, said the rule change would benefit those who'd lived a "prudent" life.

She said: "I want everybody to get all the help they are entitled to.

"These changes mean more people who have done the prudent thing and saved will be rewarded."

The increase in the capital threshold to £10,000 also applies to housing and council tax benefits for pensioners.

Those already receiving Pension Credit will have their entitlement calculated automatically, so they don't need to do anything to receive the extra cash.

John Berry, secretary of South Shields Pensioners' Association, said: "This is something we've wanted for a long time.

"Pension Credits are a real bone of contention because they are means-tested. This is a step in the right direction.

"We're told the changes will be calculated automatically. We'll be keeping a close eye on whether that is the case. If it isn't, then people could miss out."

Those who have unsuccessfully applied for Pension Credit in the past are encouraged to check their eligibility again.

Since April, Pension Credit has guaranteed single pensioners an income of £130 per week and couples an income of £198.45.

To find out about Pension Credit, Council Tax Benefit and Housing Benefit, contact the pension service on 0800 731 4811 or visit www.direct.gov.uk/pensions