The Commons Treasury Committee said that a key survey used to calculate international migration in and out of the UK was "not fit for purpose".

It said that there were now serious concerns about the "reliability and validity" of the official estimates of short-term migrants produced by the Office of National Statistics (ONS).

At the same time, the committee found that the methods used by the ONS did not provide a full picture of internal migration flows from one area to another.

It said that the ONS's successor body - the Statistics Authority - needed to devise a better way of estimating the population as an "immediate priority".

The committee also expressed concern that personal information about UK citizens gathered in the next national census - due in 2011 - may have to be handed over to the United States, if an American contractor was used.

In its report, the committee said that population estimates were central to the system of national statistics - being used to calculate the allocation of vast sums of public money to local councils, health authorities and other bodies.

However it cast serious doubts over the way the ONS's annual mid-year estimates were compiled. We are seriously concerned about the reliability and validity of ONS estimates of short-term international migrants," it said.

"Evidence for administrative data sources such as the national insurance number register suggests the ONS estimates do not reflect the scale of short-term migration in England and Wales."

The Treasury sub-committee chairman, Michael Fallon, said the Government needed to deal with the problems as "a matter of urgency".