Fewer than one in 50 reports of illegal immigration result in a person being removed from the country, a group of influential MPs has discovered.
A closer look at the allegations database, set up by the now-defunct UK Border Agency (UKBA) to follow up tip-offs by the public, revealed around 6% of claims lead to an investigation and 1.5% lead to removals.
The Home Affairs Select Committee report also said the UKBA had a backlog of 432,029 immigration and asylum cases when it was scrapped at the end of March, which at current levels will take five years to clear.
After a raft of damning reports, Home Secretary Theresa May abolished the UKBA and replaced it with UK Visas and Immigration and an Immigration Enforcement command, which were brought back under the control of ministers.
"As we have said on numerous occasions, the backlogs must be cleared as a matter of priority. Only then will the Home Office be able to tackle the deeper problems in the immigration system."
He added: "If the Government wants to get tough on illegal immigrants it needs to take effective action. When people make allegations about those here illegally the Home Office must act.
"Currently only six in 100 reports of illegal immigrants result in an actual investigation and only 1.5 in 100 result in removal. This is a very poor record and does not give confidence to those who go out of their way to help the Home Office."
The committee's report revealed that between its introduction on September 30 last year and June 30 this year, the database had received 48,660 allegations - about 178 a day.
In the eight months to May this year, allegations resulted in 2,695 investigations with visits by Immigration Enforcement officers, 1,840 arrests and 660 removals.
Mr Vaz lamented the "chaotic summer for immigration policy", citing the controversial "go home" vans, allegations that Capita asked British citizens to leave their own country, Twitter being used to publicise raids and the U-turn on visa bonds
The committee said it was concerned that measures in the Government's new Immigration Bill to charge temporary migrants for access to the NHS would be applied to vulnerable people who have been trafficked into the country.
Under the proposals, temporary migrants from outside the European Economic Area (EEA), including those on a route to settlement in the UK, will face a healthcare surcharge of around £150 per year for students and around £200 per year for others.
The report said: "We have no objection in principle to the introduction of a charge for access to the National Health Service for those who are in the UK only temporarily and would therefore not otherwise be making a long-term contribution to the NHS.
"However, we recommend that the Government distinguish between those who are temporarily in the country through choice - to work, study or visit family - and those who are here through no choice of their own, such as refugees and victims of trafficking.
"To charge these vulnerable people for access to NHS care would be wholly wrong."
The committee recommended the Government commission a pilot scheme to assess the feasibility of enforced health insurance for short-term visitors to the UK who require a visa.
The report also reveals that there remains a backlog of 32,600 asylum applications, which were supposed to have been cleared by 2011.
And the committee highlights a 13% rise in the number of asylum cases awaiting an initial decision for more than six months.
Refugee Action, which supports refugees and asylum seekers across the UK, said each case is "a human being whose life is on hold".
Dave Garratt, chief executive of Refugee Action, said: "Here's yet another report highlighting that people seeking safely and protection in this country are being let down by an unfair and ineffective asylum system."
He added: "It's about time the Government listened to these continual calls for change and established an effective and independent asylum system which treats everyone who seeking protection in UK fairly, with humanity and respect."
Immigration Minister Mark Harper said: "The UK Border Agency was a troubled organisation since its formation in 2008 and its performance was not good enough.
"That is why we split the Agency and brought its work into the Home Office under two distinct directorates.
"We have already made some progress and it is welcome that the backlog according to the Select Committee has been reduced by 70,400 or 14% in the quarter.
"Our newly created UK Visa and Immigration directorate is focused on delivering a high-volume, high-quality visa service while Immigration Enforcement is getting tough on those who break our immigration laws.
"We are building an immigration system that the public can have confidence in.
"We have already reformed the immigration rules and net migration is down by a third since its peak in 2010."
The general secretary of the Immigration Services Union, Lucy Moreton, said that there were not enough staff and resources to deal with the flow of tip-offs coming in, resulting in a "very high" number which do not lead to anyone being removed from the country.
Ms Moreton said there were various reasons why a report might not result in action, ranging from inadequate information about the name or location of the individual identified, malicious allegations against people who are not illegal immigrants and tip-offs about nationals of countries whose citizens cannot be removed from the UK.
But she told BBC Radio 4's Today programme: "Nonetheless the amount is very high, and I would be foolish to think that there is anything other than a certain extent where there was simply insufficient staff to deal with the information.
"In an ideal world it would be possible to have the resources to investigate every single one, and that would be very much where we would like to be. But in the current political climate, this is where we are, these are the resources we have got and this is what we can do with them."