MPs have criticised the payment of bonuses to employees of the UK Border Agency (UKBA).

Home affairs select committee chair Keith Vaz said it was "astonishing" that staff were paid £295,000 in 2007-08 despite new revelations about abandoned case files.

A review of files at the UK Border Agency revealed 40,000 instances where officials had "no formal record" of immigrants leaving. Most were more than six years old.

Labour MP Vaz said he was "very concerned" by the high number of errors discovered in asylum backlog files. Of the 450,000 files uncovered three years ago, 220,000 have been dealt with.

But the committee discovered 88,500 files marked as concluded – more than a third of the total - were found to contain errors.

"What is really surprising and disappointing is the number of cases where the UKBA is basically saying 'we don't know' exactly what has happened to these applicants – over half the applications are concluded for some 'other' reason than being granted or denied leave,” Vaz said.

Shadow immigration minister Damian Green said the report offered further evidence that the system overseen by UKBA was in “chaos”.

“Ministers have had years to deal with the backlog created by the collapse of controls after 1997, but it is clear that they have not succeeded,” Green said. “They should treat this as an urgent priority."

But immigration minster Phil Woolas defended the way the UKBA – founded in April 2008 following the merger of three previous bodies – dealt with the immigration backlog.

“The report is not accurate,” Woolas told the BBC, claiming that the 40,000 files without records of entrants leaving were “archives which we are systematically going through to make sure that they tally with our other records”.

And he defended the payment of bonuses to staff, saying: “We’ve brought in people from outside Whitehall and across Whitehall. We’ve got a superb management team that is getting on top of what is probably the most difficult public policy area."

“They are delivering what the government has asked them to do – and to attract people to do that, and to get a management team from across the security forces and other public and private sector organisations, requires remuneration. But they are not highly paid compared to other people in public life.”