We investigate two algorithms involving the relaxation of either the given Dirichlet data (boundary temperatures) or the prescribed Neumann data (normal heat fluxes) on the over-specified boundary in the case of the alternating iterative algorithm of Kozlov et al. [26] applied to two-dimensional steady-state heat conduction Cauchy problems, i.e. Cauchy problems for the Laplace equation. The two mixed, well-posed and direct problems corresponding to each iteration of the numerical procedure are solved using a meshless method, namely the method of fundamental solutions (MFS), in conjunction with the Tikhonov regularization method. For each direct problem considered, the optimal value of the regularization parameter is chosen according to the generalized cross-validation (GCV) criterion. The iterative MFS algorithms with relaxation are tested for Cauchy problems associated with the Laplace operator in various two-dimensional geometries to confirm the numerical convergence, stability, accuracy and computational efficiency of the method.