A new £230m computer system was brought into use at Newport Passport Office before staff were properly trained and the system tested, according to a report by the National Audit Office.

BBC Wales's Caroline Evans: "In June, delays meant 500 people missed the start of their holiday."

The report also said at least 500 holidaymakers across the UK missed their departure dates, following problems with a new computer system which left the agency unable to issue passports on time.

Total compensation currently amounts to £161,000, but is likely to rise further.

The problem arose because management failed to check a new Siemens computer system properly before it was introduced, and failed to make contingency plans if something went wrong, said the auditors.

David Davis, chair of the Commons Public Accounts Committee, said: "The total inability of the Passport Agency this summer to cope with the demands of its clients was a complete fiasco."

Frustrating queues faced holidaymakers at Newport Passport Office

The disclosure came days after the Home Office admitted passport fees could go up from the current £21 to pay for the £12.6m cost of emergency measures.

The cost includes £6m towards staff overtime, £16,000 for umbrellas for applicants forced to queue all day in the rain for their passports and £161,000 compensation to holidaymakers, but that figure is likely to rise further.

The Passport Agency lost its Charter Mark - awarded for excellence in public service - earlier this year as a result.

Passport Agency head Bernard Herdan, Siemens UK managing director Gary Pusey, and Home Office permanent secretary David Ormand - have been summoned to appear before the Public Affairs Committee next Wednesday.

'Badly damaged'

Mr Herdan said the report had identified "important lessons for the future".

"The Passport Agency is actively engaged in learning these lessons," he said.

Home Office Minister Barbara Roche said public confidence in the agency had been "badly damaged" by this summer's problems.

"We are well aware that strong and sustained evidence of improvement will be required to rebuild it," she said.

Shadow home secretary Ann Widdecombe said the public had "taken the rap" for Home Secretary Jack Straw's "failure to avert a crisis in the agency".