Cases are being dropped because CCTV systems record on DVD but courts and prosecutors only have videos.
Caught on DVD but some courts prefer video
The National Audit Office (NAO) said delays in transferring evidence from digital discs to VHS hampered justice.
Out of 167 unsuccessful cases in magistrates' courts, six were discontinued for this reason, it said.
Shadow home secretary David Davis said that "it beggars belief that criminals are going unpunished" because courts are without a £20 DVD player.
The NAO report revealed: "Problems arise because the courts, most Crown Prosecution Service (CPS) offices and the defence solicitors use standard VHS video equipment, whereas most CCTV footage is now on DVD.
"In order for a case to progress the police have to obtain the evidence, arrange for it to be reformatted and provide copies for the Crown Prosecution Service and the defence."
It added that it was crucial this evidence was available at this stage because it was often conclusive in prompting early guilty pleas or early dismissals, therefore saving the additional cost of a trial.
A spokesman for HM Courts Service said CCTV footage comes in a variety of formats, including multiplex, which is highly technical to convert.
"We are aware of the issue and are working closely with other players to ensure that CCTV can be reformatted and played in court," he said.
"It is not as simple as courts not having DVD players, because some do."
A CPS spokesman said: "We accept that the NAO have found a couple of gaps in the system and we can't argue with that.
"It generally works well in our 42 areas, but there are logistical problems involved with switching to a new system."
Mr Davis said: "It beggars belief that criminals are going unpunished because courts are not being provided with a piece of equipment you can pick up on the high street for less than £20.
"No wonder confidence in our criminal justice system is so low."