Thousands of people have obtained passports under false pretences, the Home Office has admitted.
First-time passport applicants will have a face-to-face interview
It said 10,000 passports were wrongly given in the past year but it said plans to interview applicants would combat such fraud in the future.
In earlier cases, a man who falsely got a passport was convicted of a bombing in Morocco and another found guilty of planning a major attack in the UK.
The Conservatives called the admissions "shocking".
The figures were revealed as the Identity and Passport Service gave details of plans for interviews for passports at a network of new offices.
Face-to-face interviews for adults applying for a passport for the first time would be gradually introduced from May, it said.
The two men who obtained false passports were Dhiren Barot and Salaheddine Benyaich.
A former Hindu who converted to Islam
Sentenced to life after pleading guilty to conspiracy to murder
Planned radioactive "dirty" bomb
Planned attacks on Heathrow Express and Tube under Thames
The Stock Exchange in New York was another target
Police say he was a very important figure in al Qaeda
Had seven passports in his true identity and two in false identities
Barot, from London, pleaded guilty to conspiracy to murder at Woolwich Crown Court in December and was sentenced to life with a recommendation that he serve 40 years.
He had seven passports in his true identity and two further passports in fraudulent identities.
The IPS said he would not have been able to obtain the latter two passports in fraudulent identities if he had been interviewed.
Moroccan national Benyaich had two British passports in the name of a British citizen born in Brighton. He is currently serving 18 years in Morocco for terrorist offences.
The Home Office said Barot and Benyaich were not among the estimated 10,000 fraudulent applicants, as they had been issued with passports earlier.
But a spokesman said face-to-face interviews would have stopped their applications.
Home Office minister Joan Ryan said the IPS had 16,500 fraudulent applications during the 12 month period to September 2006 - 10,000 of which went undetected.
She said that represented a level of undetected fraud of about 0.15% of the planned 6.6 million passports issued per year.
NEW PASSPORT APPLICATIONS
Interviews phased in gradually from May to end of year
For applicants over the age of 16 who have not held a passport in their own name before
Assessments take 30 minutes, including an interview of 10-20 minutes
The first new offices will be in Peterborough, Belfast, Glasgow and Newport
Another 65 offices across the UK by the end of the year
Offices close at 6pm, all will be open on Saturdays
Video conferencing for those in remote communities
Six week wait for a passport, compared to three or four now
Shadow home secretary David Davis said: "This is a shocking admission which betrays chaos at the heart of the passport system."
Downing Street said the multi-billion-pound plans for biometric ID cards would help in the fight against fraudulent applications.
But Mr Davis said it undermined the government's case for its "expensive" ID card system because false passport holders could use the document to get a genuine ID card.
The Liberal Democrats accused the government of using the "bad news" about false passports to back its case for ID cards.
Nick Clegg, the party's home affairs spokesman, said more security features on passports and targeted interviews were a better way of tackling passport fraud.
Damian Green, the shadow immigration minister, and the campaign group NO2ID both said that the interviews would inconvenience millions of law-abiding people, while criminal gangs would find it easy to get round the new safeguards.
The prime minister's official spokesman said each fraud case was being followed up and the problem was being addressed by the interviews.
Ms Ryan said the main threats of fraud came from first-time adult applicants, followed by first-time child applications.
"It appears that the level of attempted fraud is increasing and getting more sophisticated," she said.
IPS executive director Bernard Herdan said applicants would be expected to know answers from a pool of around 200 questions about their personal and financial history, such as previous addresses and when their parents were born.
"We will not ask questions to which we don't know the answers," he said.
"Before the interview takes place, we will have cross-checked that individual against various databases in order to uncover information about them."