Up to 181,000 migrants 'may have overstayed visas'
Up to 181,000 migrants who should have left the UK since December 2008 could still be here, according to UK Border Agency estimates.
The agency "does not do enough" to check people have left once their visas expire, the National Audit Office said.
The NAO said the agency should set national targets on tackling those who overstay their visas.
Immigration Minister Damian Green said radical reforms were being brought in and abuses would be clamped down upon.
The UK Border Agency is responsible for running the points-based immigration system for non-EU workers.
Since it was introduced in 2008, 182,000 migrants from outside the European Economic Area have been allowed to enter the UK for work - and a further 179,000 already in the UK have been given leave to remain.
Whitehall's spending watchdog, The National Audit Office, said while the system was largely well designed and helped meet immigration aims, it was not yet providing full value for money due to inefficient systems and customer service.
It said the agency had to rely on employers to police the points-based system but did not have an "adequate grip" on what they were doing.
While the agency claimed most employers were "compliant" - it could not say how many it had visited to check this, the report said.
Only 15% of the 22,000 employers were visited before they were granted a licence to employ migrant workers and visits were not well managed because of conflicting demands on officers and confusion about their role.
People already in the UK who saw their applications for a visa extension rejected, were not routinely chased up to check they had left, the report said.
One region - North East, Yorkshire and the Humber - had been contacting people to tell them they should leave and claimed to have encouraged 2,000 to leave voluntarily.
But apart from high risk individuals - like convicted criminals - "the agency has not taken enough systematic action to ensure, where it can, that migrants leave the UK when they are no longer entitled to remain", the report says.
"This has been due partly to a lack of exit checks, making it difficult to identify overstayers and to IT systems which cannot identify individuals needing to renew their visas.
"The agency estimates there may be up to 181,000 migrants in total (not just entering through the system) in the UK whose permission to remain has expired since December 2008."
However it said that figure is expected to be reduced, because data was being matched with the e-Borders project, a system to count everyone entering and leaving the UK.
The report also noted that checking facts supplied by people applying for work visas was difficult - is particular verifying salaries with HM Revenue and Customs and checking supporting documents.
The agency also points out that, even when documents were not forged, they did not always show what they were intended to. For example, people could borrow money to prove they had the funds to look after themselves in the UK.
Half of all staff said they found it difficult to check that documents were valid but had no discretion to refuse an application unless they could prove they were fake.
It found that the system had met in part its aim of attracting "tier one" migrants like investors and entrepreneurs and estimated that 60% of them worked in skilled or highly skilled jobs.
On the skilled workers - a category that includes jobs like IT professionals, doctors and teachers - the system had "largely met" employers' needs.
But the report noted that about a third of employers wanted to recruit more foreign workers than they were allowed to.
It also criticises the UK Border Agency for being too slow at processing companies' sponsor applications and for not giving migrants enough guidance in filling in the forms and supplying documentation.
And it noted that the agency paid £4m to the IT firm Fujitsu in 2007 for applications which were never used.
Immigration Minister Damian Green said radical reforms were already being introduced, including a cap on economic migrants and changes to student visas.
"We are also committed to reintroducing exit checks by 2015," he said.
"Counting people in and out of the country will give us better control over those that overstay.
"We are determined to reduce net migration to the tens of thousands, and clamp down on immigration abuses."