Opposition parties today criticised the Government for appearing to turn a blind eye to illegal immigrants looking for work in the UK in an attempt to meet targets on asylum.
A lack of resources is preventing the Immigration Service from investigating possible breaches of employment law, employment agencies have claimed.
Last month Home Secretary John Reid urged the public to inform on companies who take on people who do not have the right permits.
But half of employment agencies surveyed for a BBC investigation that say they have raised concerns about illegal workers claim the Immigration Service did not take decisive action.
And a Home Office spokesman conceded today: "Resources and operations always have to be prioritised."
Liberal Democrat leader Sir Menzies Campbell said he was "astonished" by the reports, warning: "Others will be encouraged if they believe the system is as slack as we have heard.
"I think the fact that this is so openly being carried on, undoubtedly reduces confidence in the system."
He denied more money was needed but funds could be reallocated from elsewhere in the budget. to tackle the "very, very obvious manifestation of the failure of the system," he told BBC Radio 4's Today programme.
Shadow Home Secretary David Davies said little had changed since Beverly Hughes was forced to resign in 2004 after claims of alleged bypassing of proper checks to cut the backlog of immigration requests.
"It's not a surprise. It's come up time and time again," he said.
"This comes as a direction from the highest level in Immigration and Nationality but also frankly it is known about by ministers.
"Ministers know it's going on and they can't deny it."
He said the Home Office was "lurching from one target to another", adding: "This is a direct outcome of Government policy and is a piece of very bad management, with serious consequences to individual citizens.
"Vulnerable people are being looked after by people with no records whatsoever - quite the opposite of what the Government claims its policy is."
One employment agency recruiting for the care and nursing sector claimed it highlighted the cases of three people with false documents last year and was told by the UK Immigration Service (UKIS) to keep them in work so their whereabouts was known.
But after five months no action was taken, with a lack of resources allegedly cited as the reason.
An online survey of 425 recruitment agencies conducted by industry body the Recruitment and Employment Confederation suggested three-quarters of agencies had spotted suspect documents.
A quarter did not even contact the Immigration Service, with a third saying UKIS was "unhelpful" when the agency reported someone with suspect documents trying to get work.
Almost half said the Immigration Service did not take decisive action.
In a statement, the Home Office said it was doubling enforcement resources and activity by 2009/10 and introducing an "integrated cross-Government approach to stamp out illegal working".
"Provisional management information indicates that there were over 40,000 non-asylum removals in 2005, of which over 12,000 were as a result of in-country enforcement action.
"The Government has made it clear that it will take a robust approach to removing people from the country where they have no legal right to be here.
"The UK Immigration Service is committed to tackling illegal working and adopts an intelligence-led approach to operations. However, whilst we always seek to remove those who have no right to be here, resources and operations always have to be prioritised to maximise the number of people we remove and for reasons of public protection."
John Tincey from the Immigration Service Union said immigration officers would be angered by the reports because "the reason they don't arrest these illegal immigrants is because they are told not to by their managers".
"The priorities set by the Home Office are to arrest failed asylum seekers and other immigration offences - such as illegal working - are very much on the back burner," he told BBC Radio 4's Today programme.
"There is no-one to do this work. There are about 1,500 immigration officers doing this work internally in the UK, compared to 140,000 operational police officers. The Immigration Service just isn't big enough to do its job."
Marcia Roberts, deputy chief executive of the Recruitment and Employment Confederation added: "Unfortunately we are seeing this time and time again."
Sir Andrew Green, chairman of MigrationwatchUK said: "Failure, on this scale, to take any action against illegal workers in Britain makes a mockery of the whole immigration system. We need a much swifter and more effective removal system.
"In practice, this may well mean pulling out of the international Conventions and writing our own laws on asylum and human rights. The present system is far too difficult for honest employers and much too easy for lawyers."Reuse content