The Driver and Vehicle Licensing Agency risks becoming "a complete laughing stock" after it emerged nearly 40% of motorbikes were untaxed, MPs have said.
Evasion rates among all car owners rose to 5% in 2006-7, costing taxpayers £214 million, up from 3.6% in 2005-6.
The Commons Public Accounts Committee urged the DVLA and Department for Transport to consider measures such as imposing penalty points on tax-dodgers.
The government said it was determined to "force tax evaders off the roads".
The MPs urged the DVLA to work with the police and local authorities to carry out more road checks and use new powers to check bikes being driven off the public highway.
Hi-tech solutions, such as electronic chips in number plates, theft-resistant plates and sensors in vehicles should be considered in the longer-term to tackle the growing problem of cloned, false and foreign plates, their report said.
It came after the MPs were told that an estimated 38% of motorbikes did not have vehicle excise duty (VED) in 2006, compared with 30% the previous year.
Committee chairman Edward Leigh said: "Motorists and motorcyclists who refuse to pay road tax are stealing from law-abiding taxpayers and unlicensed cars are often associated with other forms of crime.
"Motorcyclists are particularly liable to evade road tax. Nearly 40% of motorcycles are now unlicensed.
"If the DVLA's motorcycle enforcement regime is not to be a complete laughing stock, then the agency and the department must make the most of new powers to enforce VED on public roads."
They must also "strongly consider more severe measures such as impounding unlicensed motorcycles", he said, adding: "Large parts of the biking community are cocking a snook at the law."
The MPs found that enforcement of road tax on motorbikes was difficult because roadside cameras had been unable to read their number plates from the rear.
It was also physically difficult for the police to detain motorcyclists as they can easily turn round and drive off, the report said.
The Treasury receives £5bn a year from VED, with most car drivers paying between £115 and £300 annually, depending on their vehicle's CO2 emissions.
Motorcyclists pay between £15 and £64, depending on the engine size.
The report found that motorists who refused to tax a vehicle and register as its keeper were often trying to avoid congestion charges and conceal criminal activity.
The DVLA managed to reduce numbers of persistent evaders by just 4% to 930,000 in the period 2002-05, the report said.
But the Motor Cycle Industry Association expressed concern about the reliability of the sampling methods used for measuring VED evasion by motorcyclists.
And it questioned how the DVLA could claim a 38% VED evasion rate for motorcycles, which it said was extrapolated from a recorded figure of 16%.
The association told the committee: "As a tool for informing policy makers about targeting resources to reduce VED evasion in respect of motorcycles, the current survey appears deeply flawed.
"There is reason to believe the methods employed may grossly over-estimate both the size of evading motorcycle stock and the consequent revenue loss it represents."
The Department for Transport said it was working with the DVLA, police and local authorities and was seizing 100,000 unlicensed vehicles every year.
"New automatic number plate recognition cameras, capable of detecting motorcycle number plates, are being used in targeted enforcement operations at motorcycle events," a spokesman said
"And, from September, new legislation will allow the police, DVLA and local authorities to take action against unlicensed vehicles even if they are not parked on public roads."
Transport Minister Jim Fitzpatrick said the measures would "ensure that motorcyclists who have been increasingly evading will no longer be able to do so".
But Tory shadow transport secretary Theresa Villiers said the MPs' report was "a damning indictment of Labour's record in dealing with road tax evaders".
"Unlicensed, uninsured and untaxed drivers who hide behind false addresses are a real threat to road safety."
Liberal Democrat transport spokesman Norman Baker called for a move to a road pricing system that would enable VED to be abolished.
AA president Edmund King said: "We must do more to get these people and their vehicles off the road as they are a danger to other road users."
On 28 February the Commons Public Accounts Committee of MPs apologised to motorcyclists, admitting it had wrongly suggested 40% of motorbikes were untaxed.
Committee chairman Edward Leigh blamed the error on the Department of Transport, saying the figure was now estimated to be at 9.8%.