Removals: Asylum seekers being deported from Stansted Airport
The UK's treatment of asylum seekers falls "seriously below" the standards of a civilised society, a report says.
The Independent Asylum Commission, led by an ex-senior judge, said the system denied sanctuary to some in need and failed to remove others who should go.
It said the treatment of some asylum seekers was a shameful blemish on the UK's international reputation.
But the Border and Immigration Agency has rejected the report, claiming it operates a "firm but humane" system.
The commission spent a year researching the report and spoke to former home secretaries, policy makers and asylum seekers.
It was established in the wake of calls from community organisations and charities for an authoritative examination of asylum after former Home Secretary John Reid branded the immigration system "not fit for purpose".
Sir John Waite, co-chairman of the commission and a former Appeal Court judge, said this particular issue was a "blemish" on the UK's reputation.
The report praised immigration officials for recent reforms to how they manage asylum applications - but it warned that a "culture of disbelief" was leading to "perverse and unjust decisions".
The commissioners said policymakers were at times using "indefensible" threats of destitution to try to force some asylum seekers to leave the UK.
Another commission member, Lord Ramsbotham, a former chief inspector of prisons, told the BBC that officials considering asylum claims often had a poor understanding of an individual's circumstances.
"We are concerned at the level of the treatment of children, the treatment of women, the treatment of those with health needs, particularly mental health needs, torture survivors."
But he acknowledged: "The system is improving all the time, and we commend the strenuous efforts by Border and Immigration Agency to deal with these claims more effectively."
"We are a country with a basic instinct of fair play - it's rooted deeply in our national character," Sir John told the BBC.
"The system denies fair play to asylum seekers not out of malice but because of a lack of resources."
The head of the Border and Immigration Agency, Lin Homer, said: "I totally refute any suggestion that we treat asylum applicants without care and compassion.
"We have a proud tradition in Britain of offering sanctuary to those who truly need our protection.
"We operate a firm but humane system, supporting those who are vulnerable with accommodation and assistance.
"But we expect those that a court says have no genuine need for asylum to return home voluntarily, saving taxpayers the expense of enforcing their return.
"We will enforce the removal of those who refuse to comply, always ensuring first that it is safe to do so."
Sir John said the commissioners were concerned over the detention of asylum seekers, including children and the "hopelessly confused" public perception of asylum and its place in the immigration system.
The hearings had also come across torture victims and pregnant women being fast-tracked through the system, despite official guidelines saying this should not happen.
Overall, the treatment of asylum seekers fell "seriously below the standards to be expected of a humane and civilised society," said the report.
Figures show there were 23,430 asylum applications in 2007 - the lowest for 14 years - and a quarter of the record set in 2002.
Shadow Home Secretary, David Davis, said the government should be ashamed.
"This is a shocking indictment of the asylum system under Labour", he said, "showing that nobody wins - neither the hard earning British tax-payer nor the genuine refugee".
The Liberal Democrat home affairs spokesman, Chris Huhne described Britain's asylum system as "broken".
"The asylum process combines incredible complexity with systemic incompetence and is not fit for purpose."