A "damning" new report into migration shows official figures are "little better than a best guess", leaving the government with "blunt instruments" when trying to reduce immigration.
One witness, who gave evidence to the group of MPs compiling the new report, said that Disneyworld had better procedures for tracking entry and exit to their parks than the UK had onto our shores.
Analysis on how many non-UK residents are entering and leaving the country is primarily based on "random interviews" of travellers at ports and airports that were introduced to examine tourism trends, the Public Administration Select Committee found.
Just 5,000 migrants a year are identified through the International Passenger Survey and many "may be reticent to give full and frank answers", it warned.
Although the Office for National Statistics (ONS), which uses the research to draw up its migration estimates, has "done its best" to produce informative statistics, the survey "is not fit for the purposes to which it is put" and ministers must find new ways to gather information, MPs said.
In the year to June 2012, immigration was estimated at 515,000 while emigration was estimated at 352,000. The Coalition aims to reduce net migration - the difference between the two figures - from the hundreds of thousands down to the tens of thousands by 2015.
But MPs warned the Government is at risk of ending up with an "inappropriate" immigration policy if it bases its target level of net migration on such an uncertain statistics, "which could be out by tens of thousands".
ONS migration estimates contain no information on the immigration status of migrants while statistics produced by the Home Office do not indicate the number of visa holders with valid leave to remain in the UK or the number who overstay their leave to remain, the report said.
Statistics produce by both organisations are "blunt instruments" for measuring, managing, and understanding migration, it added.
The committee said migration figures could be considerably improved if the Home Office and ONS properly recorded and linked the data they already gather.
MPs called for the e-Borders system to be used for measuring immigration, emigration and net migration as quickly as possible.
Committee chairman Bernard Jenkin said: "Most people would be utterly astonished to learn that there is no attempt to count people as they enter or leave the UK. They are amazed when they are told that government merely estimates that there are 500,000 immigrants coming into the UK each year.
"This is based on random interviews of around 800,000 people stopped and interviewed at ports and airports each year. Only around 5,000 of those are actual migrants, many of whom may be reticent to give full and frank answers, to say the least.
"Some experts will say that this report is understated. As an island nation, with professional statisticians and effective border controls, we could gain decent estimates of who exactly is coming into this country, where they come from, and why they are coming here.
"As it is, the topline numbers for the Government's 100,000 'net migration' target are little better than a best guess - and could be out by tens of thousands. Clearly these statistics are not fit for purpose in the longer term."
The International Passenger Survey also fails to garner the type of information needed to work out the social and economic consequences of migration, such as demand for the National Health Service or schools.
MPs raised concerns about the potential loss of the Census arguing it provides the most accurate information at a local level about migration.
Jenkin added: "There is also the problem that few people understand what 'net migration' is. It tells you nothing about how the nature of the UK population is changing, because the total immigration figure is partly offset by large numbers of UK nationals leaving.
"And if you try to work out, say, how many Egyptians or Syrians came to the UK last year, any numbers are virtually meaningless, because they are based on the tiny number of Syrians or Egyptians who were actually interviewed - assuming they felt able to tell the truth when they answered the questions.
"Some would say that successive governments have hardly been trying to fix this - they didn't want people to know the truth. Even now, the really useful information from e-borders data is at least five years off. Given the importance of immigration as a potentially explosive issue, this ought to be given a much higher priority."
Chris Bryant, shadow immigration minister, said: "This report further casts into doubt the Tory-led Government's claims to have cut net migration.
"People want a bit of honesty on immigration, so the Home Secretary should look at how to measure immigration more accurately as a matter of urgency.
"Grand speeches, gimmicks and dodgy statistics don't cut much ice, especially when the government still don't even have a plan to count people in and out of the country.
"The system to count people out of the UK, e-borders, has been in development for years. The Home Secretary should make getting it online a top priority."
Westminster City Council leader Philippa Roe, who gave evidence to the committee, said: "When I gave evidence to this committee I said Disney World has better technology to keep track of its visitors than we as a country do, and I am pleased this report accepts that the current system is a blunt instrument which is patently not up to the job.
"Today's report is damning of a system which has grown up over the last decade. It should provide a platform for the Home Office to take the action we need to take."
A Home Office spokesman said: "We disagree with the report's conclusions. Government reforms on immigration are working and the statistics do show that net migration is at its lowest level for a decade.
"The Government is determined to build a fairer system and to address the public's concern about immigration. We are committed to getting net migration down from the hundreds of thousands to the tens of thousands, and we want to be judged against the very best available evidence.
"Net migration is at its lowest level for a decade and the numbers have been steadily falling quarter by quarter."