A man who claimed he was disabled got £5,796 in benefits while working 12-hour shifts at a biscuit factory.
George Beattie, 57, received Disabled Living Allowance after telling officers from the Department of Work and Pensions (DWP) he could barely walk.
He signed a declaration stating he was unable to work.
But Blackpool Magistrates’ Court heard Beattie, whose family runs a Blackpool hotel, had been working long hours at United Biscuits for two years.
Beattie, of Bairstow Street, Blackpool, pleaded guilty to fraud.
Magistrates heard how he told the authorities he was virtually unable to walk, taking up to three minutes to travel just eight yards.
He said he had to use two walking sticks, would fall three or four times a day and was unable to use household items like the cooker and pots and pans.
When the DWP was tipped off that Beattie was living a double life officers mounted a surveillance operation on him.
He was followed to and from the United Biscuits factory, where he worked as a production operative in a nine-person team.
Tracy Yates, prosecuting, said: “They discovered his work pattern involved working 12-hour shifts. During those shifts he would be on his feet 90 per cent of the time.”
Fraud officers questioned Beattie about his lifestyle and he admitted to them his health had improved and that he did not need a carer.
The prosecutor added: “He told the investigators he had a knee cap removed but his condition had improved and no longer required walking sticks.”
Magistrates heard Beattie was paying the DWP back at the rate of £100 a month and was fit enough to do unpaid work for the community in a charity shop.
Beattie, who represented himself, said: “I wish to apologise. What I did was a mistake.
“I should have told the authorities. It will not happen again.”
He was ordered to pay £145 in court costs and was told to 200 hours unpaid work.