The £385 million immigration case work (ICW) computer system, which aimed to improve efficiency and cut costs, has "significant problems" and, despite early successes, "has slipped by a year and is over budget", the NAO said.
Despite less being delivered than expected, the system was £28 million (12%) over its £224 million budget by the end of March and overall expected savings had been revised down to £106 million.
Some 540 requirements, previously described as "must haves", have been removed or postponed in the latest version of the system, leading to limitations, including that customers will not be able to track their applications online.
Further staff reductions before systems such as the ICW programme are implemented "may impact negatively on performance", a risk the agency acknowledges but the impact of which it "is unable to quantify", the watchdog said.
The UK Border Agency has cut too many staff too quickly, Whitehall's spending watchdog said today.
Athletes from the British Virgin Islands are receiving a warm welcome from a British host family in Hertfordshire.
A bus carrying athletes got lost in London today. A bus driver transporting the media also had to pull over to consult his map.