Housing charity Shelter said the payments could be vital to stop people losing their homes, but were a "quick fix" for a flawed housing system.
Figures from the Department of Work and Pensions show South Tyneside Borough Council paid £575,200 in Discretionary Housing Payments to claimants in 2018-19.
Discretionary Housing Payments are given to people who qualify for either Housing Benefit or the housing element of the new Universal Credit, and who are struggling with housing costs.
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Of the total awarded in South Tyneside, £387,700 went to helping people who were in difficulties because of reforms in the welfare system.
The main cause of financial hardship was the so-called bedroom tax, which reduces housing benefits for people with a spare bedroom, accounting for £285,500 of the total.
A further £285,500 went to people affected by the so-called bedroom tax, which reduces housing benefits for people with a spare bedroom, and £35,400 because of other welfare reforms, or a combination of the bedroom tax and benefit cap.
In total, 1,416 payments were made to claimants during the year, averaging £406 a piece.
The amount spent on Discretionary Housing Payments in South Tyneside have increased by 88% since they were introduced in 2013-14.
Public services think tank Reform warned that local authorities were having to plug the gaps in national welfare spending – despite their budgets being hit hard under austerity.
Each year, the Government allocates a set amount of funding to each local authority for Discretionary Housing Payments.If an authority needs to spend more than this, however, it must dip into its own funds.
Last year, South Tyneside Borough Council spent 98% of its government allocation. Across England and Wales, councils paid out almost £151 million during the course of the year.
One in three councils had to spend more than the amount they got from government.
Polly Neate, chief executive of Shelter, said: "Discretionary Housing Payments are vital in many cases and can be the difference between people losing their home or not – but they shouldn’t be a replacement for a fit-for-purpose welfare system.
“These payments shouldn’t be needed so much in the first place – they’re simply a quick fix to structural problems.
“To solve the underlying crisis for good, the Government must commit to building 3.1 million social homes in the next 20 years, as well as making sure housing benefit is enough to actually cover rents.”
A DWP spokeswoman said the Government spent £23 billion a year helping people in the UK with their housing costs.
She added: "Since 2011, we have provided local authorities with over £1 billion in Discretionary Housing Payments to protect the most vulnerable claimants.
"The allocation of this funding ensures a fair distribution across local authority areas, and is reviewed each year."
South Tyneside council have declined to comment on the issue.