have stayed in UK illegally

It calls on the UK Border Agency to do more to check that migrants leave the UK if they have no right to remain.

"The agency's points based system is not yet delivering its full potential for value for money. While it is well designed and adaptable, the underlying systems and management information are in need of improvement," audit office head Amyas Morse said.

"Customer services do not meet customer expectations and the agency cannot easily identify and follow up individuals whose visas have expired," he added.

The study's conclusions show that the agency has some contact details for an estimated 181,000 failed applicants but that it "cannot be sure how many have left the UK."

Poor information systems are also undermining the agency's ability to manage the risk that sponsors are failing to comply with immigration rules, the audit office study concludes.

The border agency rates 96 percent of its 22,000 sponsoring employers as compliant but is unable to say how many it has visited to confirm this, according to the study.

Immigration Minister Damian Green said the report shows exactly why reforms to the UK's immigration system are needed.

Radical reforms are already being introduced, including "the introduction of an annual limit on economic migrants, sweeping changes to the student visa system, and a shake-up of the family and settlement route," he said.

"We are also committed to reintroducing exit checks by 2015," Green said, adding: "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."