The mistake occurred because the DoE had to use provisional population figures from the 1991 census when it calculated this year's SSAs.
The final figures, released by the Office of Population Censuses and Surveys in June, increased inner London's population by 43,400 and outer London's by 19,400.
A DoE paper to one of the working parties discussing next year's grant settlement with the local authority associations shows these figures would have given inner London boroughs an extra £21.5m and outer London boroughs another £4.6m.
The OPCS has recently added another 145,000 people to its final figures for England and Wales to account for underestimating net immigration between 1981 and 1991 (LGC, 13 August).
'The government should immediately pay London boroughs the money which they are owed', said Toby Harris, chair of the Association of London Authorities.