An estimated 10,000 passports were issued to fraudulent applicants in 12 months, the Home Office has said.
Thousands of people, including two men convicted over terror attacks, obtained passports under false pretences, the Home Office has admitted.
The documentation was given out by the Identity and Passport Service (IPS) in the year up to September 2006.
It admitted 10,000 passports were wrongly given in the past year, but said plans to interview applicants would combat such fraud.
Home Office minister Joan Ryan said the IPS had 16,500 fraudulent applications during the 12 month period, 10,000 of which went undetected.
One of the men was convicted of a bombing in Morocco, and the other of planning a major attack in the UK.
Meanwhile, it has emerged two convicted terrorists were issued with two false British passports each.
The Conservatives called the admission "shocking".
One was a Moroccan found guilty of a bombing in Casablanca, and the other was Dhiren Barot, from London, who was sentenced to life last November for plotting to kill thousands of people in the UK and US.
ID questions
During Barot's trial, the court heard he considered using a radioactive "dirty bomb".
The figures were revealed as the Identity and Passport Service gave details of plans for interviews for passports.
'More sophisticated'
Face-to-face interviews for adults applying for a passport for the first time would be gradually introduced from May, it said.
The figures were revealed as the IPS prepares for a new initiative to cut fraud.
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.
A requirement for adults applying for a passport for the first time to attend face-to-face interviews will be gradually introduced from May, the IPS said.
Shadow home secretary David Davis said: "This is a shocking admission which betrays chaos at the heart of the passport system."
"It appears that the level of attempted fraud is increasing and getting more sophisticated," Ms Ryan said.
He added that it further undermined the Government's case for its "expensive" ID card system because false passport holders could use the document to get a genuine UD card.
The main threats of fraud came from first-time adult applicants followed by first-time child applications, she added.
The prime minister's official spokesman said each case was being followed up and the answer to the problem was being addressed by the interviews.
Downing Street said the passport service had made huge progress in the fight against fraud.
Ms Ryan said the main threats of fraud came from first-time adult applicants followed by first-time child applications.
The prime minister's official spokesman said each case was being followed up and the answer to the problem was being addressed by the interview initiative.
"It appears that the level of attempted fraud is increasing and getting more sophisticated," she said.
Phased scheme
Pool of questions
Passport officials have said the interviews will be "vital" in helping to crack identity fraud.
IPS executive director Bernard Herdan said applicants will 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.
Some 69 centres are being set up across the UK, with maximum round-trip journey times for applicants of two hours.
"There isn't a pass/fail mark on this. It's about assessing in the round the material we have received in the interview and on paper," said Mr Herdan.
The scheme, which will deal with 600,000 applications a year, will be phased in across the country.
New applicants will be told to allow six weeks to obtain their passports, compared with the current three to four weeks.
The assessment process is expected to take about half an hour, including an interview lasting 10 to 20 minutes.
Missing in post
The first offices to open will be in Peterborough, Belfast, Glasgow and Newport, followed by another 65 offices across the UK by the end of the year.
Although some offices will not be open on every weekday and will close at 6pm, all will open on Saturdays.
Last month, a report suggested more than 1,000 passports were going missing in the post each year.
Last month, a report suggested more than 1,000 passports were going missing in the post each year.
Conservative MP Grant Shapps, who compiled those figures, said they raised "serious concerns" over the risks of identity fraud and terrorism.
Conservative MP Grant Shapps, who compiled those figures, said they raised "serious concerns" over the risks of identity fraud and terrorism.
In response, the Home Office said the loss of passports had fallen "dramatically".
In response, the Home Office said the loss of passports had fallen "dramatically".
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