They will be left in limbo as their claims are consigned to a growing pile of applications unlikely to ever be resolved, the Commons Home Affairs Select Committee said.
Of the backlog of up to 450,000 claims identified in 2006, at least one in seven "will be concluded on the basis that the UK Border Agency (UKBA) has been completely unable to trace what has happened to the applicant", the MPs said.
In a critical report, the MPs found the UKBA was "still failing to meet expectations" with delays and backlogs being attributed "at least in part to inadequate decision-making in the first instance".
"While we agree that the UK Border Agency should not spend unlimited time trying to track down missing applicants, we are concerned about the high proportion of cases which will be left, in effect, in limbo," the report said.
"Again, this points to the vital need to deal with cases as expeditiously as possible and not to let backlogs grow."
Keith Vaz, the committee's chairman, added: "Much of the delay in concluding asylum and other immigration cases stems from poor quality decision-making when the application is initially considered.
"The UK Border Agency has made some progress over the last few years in relation to new procedures and approaches, but is still failing to meet expectations.
"More consistent and rigorous scrutiny of applications would lead to fewer delays, fewer appeals, less uncertainty for the applicant, less pressure on the officials themselves, and probably lower costs for the UK taxpayer."
Greater investment in staff training and a "more consistent and considered direction from those setting policy" may both be needed, he said.
The backlog of up to 450,000 unresolved asylum cases first emerged in 2006, with some dating back more than a decade.
Several steps have been taken to clear the backlog and asylum seekers who have not been able to be traced by UKBA officials, and who have not appeared on watchlists for at least six months, are consigned to a "controlled archive".
UKBA's outgoing chief executive Lin Homer told the committee that very few of these would "come alive again", meaning they were unlikely ever to be decided.
The MPs' report also criticised the increased speed at which some of the cases in the backlog seem to have been resolved, with officials clearing 57,500 cases between July and September last year, up from just 15,500 cases between October 2009 and January 2010.
"We are concerned that in the rush to clear the backlog - not least as the clear-up rate initially was fairly slow - principle may be being sacrificed to the timetable, and grants of settlement may be made that would not be allowed in other circumstances," the MPs said.
Concerns were also raised over training and supervision of those involved in the enforced removal of failed asylum claimants.
"We are not at all convinced that the UK Border Agency is being effective in making sure that its contractors provide adequate training and supervision of their employees in respect of the use of force.
"This is a fundamental responsibility of the agency and is not simply a matter of clauses in contracts or formal procedural requirements."
And it also questioned Ms Homer's £208,000 salary - £66,000 more than that of Prime Minister David Cameron - and recommended that "a significantly lower salary should be paid to her successor".
Mr Vaz added: "In the current climate we believe it is inappropriate for senior Home Office officials to receive any bonuses."
The report also found that about 70 foreign prisoners released before 2005 without being considered for deportation have still not been found.
"There is no way of knowing how many or which of them have left (the country) - or whether they include those with a record of serious offences," the MPs said.
UKBA progress in finding them has "inevitably slowed almost to a halt", they said.
Today's report also called for the UKBA to ensure that immigration loopholes were closed, particularly in relation to bogus colleges, repeating a previous call by the committee regarding the need for unannounced inspection visits to educational establishments.
Immigration Minister Damian Green said: "We have known for some time that the asylum system was chaotic and has been recovering slowly.
"This Government is absolutely committed to ensuring asylum cases are concluded faster, at lower cost, and that we continue to improve the quality of our decision making.
"It is also crucial that the UK Border Agency focuses its resources effectively - which is why it is sensible to target those individuals where our evidence shows they are still in the country.
"Some of these cases date back over a decade. But we will continue to track down those who try to break the rules."
Nick Scott-Flynn, head of refugee services for the British Red Cross, said: "The committee raises a number of serious issues relating to the way in which asylum seekers are treated.
"We recognise that some progress has been made, but any failure to meet standards in the training and supervision of staff involved in cases of enforced removal is extremely worrying.
"Every day, the British Red Cross is being asked to provide the most basic support to asylum seekers.
"Improving the way applications are processed must be a priority for the Government. As should care and support for those within the system.
"A more human approach has the potential to deliver a more efficient asylum system, as well as reduce costs."
