Claims that nearly one million children in England attend poorly performing schools are being disputed by teaching unions and the government.
The committee report claims over 1,500 schools are under-performing
The Commons Public Accounts Committee says 1,557 schools do badly despite the £837m spent on raising achievement.
But unions say this is "misleading and damaging" as exam results often reflect a school's intake.
Meanwhile, Ofsted figures show that 32 schools shut due to poor performance in 2005/06 - compared with 25 in 2004/05.
'Apples with pears'
The government said claims that many of the schools referred to in the committee's report were failing were "insulting".
Schools minister Jim Knight said the report "compares apples with pears", mixing together schools which were failing with those which simply performed less well at exam time.
"A significant proportion of these schools are not failing," he said.
"In some, 60 to 70% of pupils get five good GCSEs and many others are improving very quickly thanks to incredibly dedicated staff and excellent leadership."
He added that, since 1997, standards had risen across the board. The number of schools with under a quarter of pupils gaining five good GCSEs had dropped from 616 in 1997 to 110 in 2005.
In his monthly press conference, Prime Minister Tony Blair said school results are improving - but some schools were not performing as well as they should be.
There had been a 50 per cent drop in schools on special measures, he said.
He said: "When we came to office in 1997 there were many London boroughs with an average of 25 per cent of good GCSEs. Today there is not a singly borough in London - not one - that has not got a record of over 40 per cent of five good GCSEs."
The Association of School and College Leaders said the committee's conclusions were based on a "flawed" report by the National Audit Office, issued last January.
General secretary John Dunford said: "Many of these so-called failing schools serve disadvantaged communities where the school is so often the only place that improves young people's life chances.
"School leaders devote their lives to educating and supporting such children and their families and will bitterly resent political games being played with these misinterpreted statistics."
Dr Dunford said it was wrong to assume that because a school was in the bottom 25% it was failing.
"There will always be 25% of schools in the bottom quartile, no matter how good their results, just as there will always be 25% of schools in the top quartile," he said.
The PAC report comes after Sir Cyril Taylor, head of the Specialist Schools and Academies Trust, said about 500 secondary schools were seriously underperforming based on GCSE results.
Teaching groups called Sir Cyril's comments unhelpful and demoralising.
The PAC report, Improving Poorly Performing Schools in England, acknowledges that fewer schools now under-perform.
Newly released Ofsted figures show that 32 schools were shut due to poor performance last year - compared with 25 the previous year.
The figures show that in July 2006 14 schools were classed as underachieving.
In addition, 208 were in special measures and 117 had "serious weaknesses".
This compares with 49 underachieving in July 2005 - when 242 were in special measures and 286 had serious weaknesses.
Additionally, in July 2005 the Department for Education classed 402 schools as "low-attaining" and 578 as "under-performing".
Conservative MP Edward Leigh, the committee chairman, said: "To waste so much human potential in this way is a tragedy.
"The consequences in the long term for the pupils themselves and, more widely, for our society, will be severe."
The report highlights the crucial role played by head teachers in setting the ethos for a school and calls for measures to attract more talented candidates to fill increasing numbers of vacancies for heads.
It also warns that the new "light touch" inspection regime introduced by Ofsted last September is not right for under-performing schools.
Shadow education secretary David Willetts said children in those schools suffered a "huge disadvantage" and raising standards "must be the priority".
Liberal Democrat education spokeswoman Sarah Teather said a good head teacher was central to a successful school.
"The government is creating the problems of tomorrow by not tackling failing schools today," she said.