Government plans to introduce ID cards are "inconsistent" and "lacking clarity", the Commons science and technology committee has said.
Ministers think cards will cost £30 or about £93 if used as a passport
The MPs were sceptical about the estimated costs of the scheme, which Tony Blair has called "a major plank" of Labour's next election manifesto.
They also said there was public confusion about ID cards because there had not been enough details about them.
The committee was looking into the progress of technology for the scheme.
The committee's chairman said the Home Office should be alarmed at progress of the scheme, due to be introduced in 2008.
Liberal Democrat MP Phil Willis said there was "not the level of confidence in this scheme that could be expected at this stage".
He said: "Despite their vested interests in the scheme, industrial representatives are speaking openly about their concerns regarding the identity cards programme - this should set alarm bells in the Home Office ringing."
There were currently too many uncertainties and "as a matter of urgency", the Home Office needed to give "a clearer idea of what identity cards will be used for", he added.
The report questioned the estimated annual running costs of £584 million supplied by the Home Office.
This total has also been disputed by research from the London School of Economics, which suggested the total would be almost twice that sum - an average of £1.06 billion a year for the first decade - in the best-case scenario.
"We acknowledge that the release of firm overall costing has been driven by political imperatives," MPs wrote, "but the Home Office could have credibly given a broad range instead of precise figures."
They also cautioned against the cutting of corners in card and database technology in order to meet cost targets.
On Thursday at his monthly briefing to reporters, the prime minister insisted ID cards were "a huge opportunity" and necessary to tackle immigration and crime.
He added there was no doubt the scheme - which is opposed by the Conservatives and Liberal Democrats - would proceed.
Everyone over the age of 16 who applies for a passport will have their details - including fingerprints and eye or facial scans - added to a National Identity register from 2008.
For two years, people will be able to opt out of having an ID card, but from 2010 anyone getting a passport will have to accept one.
The committee said there was confusion over what the scheme would entail because not enough details had been released.
"In order to clarify when and how the card might be used, we recommend that the Home Office releases more information regarding what personal data will be revealed in different scenarios, including in an online context," it said.
"Until this information is released, it is difficult to ascertain the true scope of the scheme and to fully understand how technology will be used within the scheme."
In a second report on ID cards, the Information Commissioner upheld two complaints that information about independent analysis of the progress of the ID project was unfairly being kept secret.
The Treasury now has 35 days to either reveal whether the scheme has been given a green, amber or red light, or appeal against the ruling.