The National Audit Office says asylum figures are "in most respects reliable" after a probe into claims figures were massaged by relaxing immigration rules.
The inquiry is meant to restore public confidence in the system
It says there is "no clear statistical evidence" that asylum was cut at the expense of other forms of migration.
But it points to "several weaknesses" in how the figures are compiled and says some statistics are "misleading".
Meanwhile, new Home Office figures show asylum claims fell by a fifth to 10,585 in the first three months of the year.
Conservative home affairs spokesman David Davis said the NAO had stated some of the figures provided by the government on asylum seekers were "misleading" and described the report as a "whitewash".
"To this day, we still don't know how many people are in this country, and we still don't know how many of them are here illegally," he said.
"If there is no data on illegal immigrants, how can the government claim to have the asylum system under control?"
The review was launched after Immigration Minister Beverley Hughes quit after allegations of a visa scam involving business immigration applications from Romania and Bulgaria.
At his monthly news conference, Tony Blair said the report showed progress on cutting asylum figures "is real".
He promised to act on the NAO's recommendations for improvements.
But pointing to the new statistics for this year, he said: "These asylum figures show that the dramatic progress that we made last year when we halved the number of asylum applications has continued."
Auditor general Sir John Bourn concluded: "The asylum data and statistics are in most respects reliable, including the Home Office's reporting that the number of asylum applications halved between October 2002 and September 2003."
Research for the NAO said there was no statistical evidence that some people who might previously have claimed asylum instead came to Britain through other legal migration routes, such as work permits.
There may have been some diversion of Polish nationals onto the scheme for seasonal farm workers but there could be many reasons for this change, it says.
The NAO points to "several weaknesses" in the way the Home Office compiles and presents the figures. Those include:
- The way the number of claims for benefits for asylum seekers is presented is "materially misleading", because they "omit some of those receiving support and include others who should not".
Support for some asylum seekers continues after it is meant to have stopped in what the NAO calls a "waste of public resources".
Some illegal immigrants told to apply for asylum may go missing from the records.
Keith Holden, co-author of the NAO report, said the figures needed to be presented more clearly.
The Home Office had made a "marked improvement" in its case database but there were a number of weaknesses.
WHERE ASYLUM SEEKERS CAME FROM IN Q1 2004
Somalia: 1,000 applicants
DR Congo: 405
Source: Home Office
Mr Holden said statistics for claims to the National Asylum Support Service were "presented in a way that is very factual but they are not a particularly easy set of statistics for a general user to understand".
He said the Home Office provided all the figures for those receiving benefits in the asylum process - but the way they were presented meant that 17,000 cases were not obviously apparent to those reading the figures.
On illegal migration, Mr Holden said: "There's an absence of data, it's not possible to assess where people have decided to claim asylum or enter through other routes."
The NAO wanted the government to improve its record of removals, he said. In 6% of the cases they examined, there was no evidence that the removal had taken place.
"We're not saying that the removal didn't happen, they just have not had the evidence in the case to say they had been removed," he added.
The National Audit Office also said the Home Office should do more to help the public understand how many asylum claims are ultimately deemed genuine or unfounded.
The Tories have said the NAO inquiry falls short of the full independent investigation they want.
Meanwhile the latest asylum figures, for the first quarter of 2004, showed applications - including dependants such as children and spouses - down to 10,585 from 13,150 in October to December 2003.
While 12% of applicants are being accepted as having a case, the Home Office is now losing more than a fifth of appeals, continuing a year-long upward trend.
The number of failed asylum seekers who were removed from the UK in the first three months of this year rose 1% to 3,320, a 27% increase on the same period last year.
Including dependants, the number of people removed was 4,085.
The number of people applying for British citizenship rose by 21% to 139,315 during 2003.
A Home Office spokeswoman said the number of cases awaiting initial decisions was now at its lowest for a decade at 18,100.