The tale of the library's design and construction is a 'shambles', MPs on the National Heritage Committee said.
It has produced 'one of the ugliest buildings in the world.'
The existing Round Reading Room of the British Library - which campaigners have fought to retain - should be kept open in perpetuity as a public reading room integral to the British Library, the committee said.
It also called for an inquiry to establish who approved the design of the new library, at what cost, and who if anyone was in charge, should be set up under a former Ombudsman.
In a report remarkable for the strength of its language, the report says the saga of the library is 'a sorry story'. It was meant to be a demonstration of how to house one of the great libraries of the world.
'Instead, more than 16 years after the project was launched, and 12 years after construction was started, there sprawls next to St Pancras station a messy building site in which there lurks an edifice that resembles a Babylonian ziggurat (pyramid) seen through a fun-fair distorting mirror.
'No one - ministers, library staff, building contractors, anyone at all - has more than faintest idea when the building will be completed, when it will be open for use, or how much it will cost.'
Until committee members had taken evidence and seen the site for themselves, they had had 'no true idea of just what a shambles the story of the British Library had turned out to be'.
The committee, chaired by the Labour MP Gerald Kaufman, said it was not convinced that the total bill for the new library would be kept below pounds 450m. It was told costs had risen to that level from pounds 164m, 13 years earlier.
'What has occurred in the case of the British Library is a classic example of a project costing too much and burgeoning out of control.'
Despite the vast cost, the new library will not even satisfy the needs it was intended to meet, the MPs said.
'The new building, when it is completed, will not be big enough to hold the books the Library currently owns, much less those which, as a library of deposit, it will be receiving each year . . . Nor does it provide storage facilities for the national newspaper collection.'
Land to the north of the St Pancras site should be retained until the library has been operating from its new site for several years in order to allow future needs to be accurately assessed, and that land should be retained even if there are insufficient funds available at the time for its development.
Meanwhile an inquiry should be established and should report back within three months 'to establish whether there has been maladministration or incompetence.'
Fifth Report National Heritage Committee, 1993-4; HMSO; pounds 11.Reuse content