The UK Border Agency faces a backlog of cases equivalent to the population of Newcastle, MPs warned yesterday.
The troubled agency still has more than 275,000 cases on its books, including missing foreign criminals, failed asylum seekers and illegal immigrants, which have not been dealt with and will take years to clear, the Commons Home Affairs Select Committee said.
Keith Vaz, the committee's chairman, said the agency seemed to have "acquired its own Bermuda triangle".
"It's easy to get in, but near impossible to keep track of anyone, let alone get them out," he said.
A critical report on the agency by the Home Affairs Select Committee highlighted the 3,900 foreign-national prisoners currently living in the community having completed their sentences and 101,500 failed asylum cases where people could not be located.
The agency "does not have a strong record in deporting foreign-national offenders" and should set up a team to ensure that foreign criminals are sent home, the MPs said.
However, the Government risks damaging the long-term recovery of the economy by restricting the number of foreign students who are allowed to come and study in the UK, the report also warns.
Under Home Office plans to curb immigration, ministers propose to reduce the 260,000 student visas issued each year by around 25 per cent.
But the Home Affairs Select Committee said the policy would result in the UK falling behind international competitors by putting off the brightest students from coming to this country. It concludes that students should be excluded from the net-migration targets. This, it says, would also prevent damage to Britain's leading role in the international higher-education market, worth £7.9bn a year.
Ministers are under growing pressure to relax the quotas following pressure by university vice-chancellors.
The committee said David Cameron's pledge to cut net migration from 250,000 to the tens of thousands by 2015 could be counter-productive if they include students.
But Immigration Minister Damian Green has said students staying for more than a year are not visitors and their numbers affect communities, public services and infrastructure.