The Home Office is facing a fresh backlog of asylum cases, on top of 30,000 unresolved applications dating back to 2007, MPs have warned.
The Public Accounts Committee said the number of new asylum seekers awaiting an initial decision on their status rose 70% in the first quarter of 2014.
It also warned that contact had been lost with 50,000 people who had been refused the right to stay in the UK.
Ministers said they were "addressing the backlogs inherited" in 2010.
Home Office minister James Brokenshire said the immigration and asylum system had been "totally dysfunctional" prior to the coalition government taking office, and that progress was being made.
The government overhauled the UK's immigration and asylum operations last year after a series of controversies, including a row in 2011 over the relaxation of passport checks, which led to the resignation of the head of the UK Border Force.
Home Secretary Theresa May scrapped the UK Border Agency and assumed direct executive responsibility for its Border Force enforcement arm, as well as UK Visas and Immigration and Immigration Enforcement, new bodies created as part of the major Whitehall restructuring.
In a report analysing the impact of the changes, the cross-party committee said performance had "held steady" in most areas since the reorganisation but the Home Office had still "failed to deal" with the longstanding asylum backlog.
CaseworkersIt said 29,000 cases dating back at least seven years remained unresolved, with 11,000 people yet to receive an initial decision on whether they could stay in the country.
The committee took evidence from top Home Office civil servant Mark Sedwill during its inquiry MPs also suggested the Home Office was failing to meet its own targets for processing newer claims, which totalled 16,273 in the first three months of 2014.
It partly attributed this to the agency's "botched and ill-judged" decision to downgrade caseworkers working in the area.
Although the decision was subsequently reversed, the committee said it led to 120 experienced staff leaving, and this - combined with major problems with IT systems - meant the department lacked the data to manage the backlogs and track people through the system.
"It is deeply worrying that the Home Office is not tracking those people whose applications have been rejected to ensure they are removed from the UK," said Margaret Hodge, the Labour MP who chairs the committee.
"At the end of 2013-14, there were over 175,000 people whose application to stay in the UK had been rejected, and they are placed in a migration refusal pool to await removal.
"The number of such cases has not been reduced over time. Some may have left the UK voluntarily but without exit checks it is almost impossible to know."
'In limbo'Mrs Hodge said the Home Office had asked external contractors to check more than 250,000 case records in 2012 and 2013 but they had been unable to contact more than 50,000 people listed and their whereabouts were unknown.
She said this "particularly disturbing" matter must be dealt with urgently while the Home Office must ensure it had sufficient staff with the right skills to resolve outstanding claims and prevent new backlogs growing in size.
The Refugee Council warned that people caught up in the asylum system were "living in limbo".
"Behind these statistics are individuals, many of whom will have suffered extreme trauma, forced to live day to day in uncertainty while they await the outcome of what could be a life or death decision," said its head of advocacy, Lisa Doyle.
"It is very important that the Home Office makes decisions in a timely manner, but it's even more important that it gets its decisions right first time."
'Years of mismanagement'The UK considers applications for asylum in line with its obligations as a signatory to the 1951 Geneva Convention and the 1950 European Convention of Human Rights.
The Home Office, which published its latest figures on its handling of asylum applications in April, said the 11,000 figure quoted by the committee was inaccurate.
Initial decisions had been made in many of the outstanding cases, it said, and officials were now considering further evidence provided by applicants with the aim of doing so by the end of the year.
The recent increase in asylum claims was due to instability in the Middle East and North Africa, it added, but also to past failings by the Border Agency which had been addressed.
Mr Brokenshire added: "UKBA was a failing organisation that could not deliver an efficient immigration system for Britain.
"This is why we split it up into three separate divisions to improve focus on their specific roles in delivering a controlled immigration system and bring them under the direct supervision of ministers.
"Turning around years of mismanagement has taken time, but it is now well under way. We have reformed visa routes to make them more resistant to fraud and cancelled failing contracts. And we are addressing the backlogs we inherited."
New asylum backlog emerges, say MPs
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