Nigel Evans, a member of the House of Commons international development committee, claimed the "cash payments" can work "extremely well" in some cases but voiced concerns over potential misuse of funds because of the lack of monitoring.
The UK hands out more than £200 million of its foreign aid budget in direct cash payments to 28 countries across the world.
A report by the Independent Commission for Aid Impact warned the programme that there are "recurrent problems" and money has been seen handed out to the wrong people.
Nigel Evans warned foreign aid could be fraudulently claimed
We have to remember this is British taxpayers' money
"There is an independent commission that looks at the whole spectrum of international development aid – we give about £12-13 billion a year.
"The aspect of direct cash payments has gone up from £50m – just a few years ago – to £200m now.
"I myself, have been to the Democratic Republic of Congo and I've seen refugees from the war in the north-east of the DRC, where cash payments were actually given to families and it worked extremely well when it is properly monitored."
The MP for Ribble Valley added: "But the independent commission, themselves, have got reservations to whether fraud may be taking place – where multiple payments are being received.
"There, I have got real concerns, because unless we can take the people with us, we have to remember this is British taxpayers' money.
"There are people listening to this programme, who will either themselves be strapped for cash or indeed impoverished, or know people who are and will wonder why we are giving money to people who may be misspending it or defrauding it in other parts of the world."
The ICAI report suggested Department for International Development officials have avoided dealing with issues of "fraud and leakage" throughout the programme because it may be "politically difficult".
The report highlighted a case in Bangladesh where aid officials had failed to address issues surrounding cash payments going to the wrong people even though they were "well known and evidenced".
UK Foreign Aid: Where did it all go? Mon, January 16, 2017
Public mood changes following scandals over how the money is allocated. This is where the UK Foreign Aid was being spent in 2015.
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India = £150.4m
Another in Nigeria said people were providing fake urine samples to officials in order to be given cash meant for pregnant women.
Alison Evans, ICAI's chief commissioner, who led the review, however, praised the scheme: "DFID's use of cash transfers has helped to tackle poverty and vulnerability for some of the poorest people in the world.
"The department has reached millions of people, providing strong value for money, and helping deliver on the commitment to 'leave no-one behind'.
"But there is no room for complacency. Going forward, DFID needs to do more to improve on school attendance, health and nutrition and women's empowerment, where the global evidence shows that cash transfers can make even more of a difference."
Express.co.uk has contacted the Department for International Development for comment.