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The MPs, from all parties, concluded: “Migration is having significant effects. The sheer pace of change has escalated concern to the point where migration has become the single greatest public concern.”

They warned that the continued under-funding of remedies to deal with pressures caused by migration risks “community tensions escalating” as many people think migrants are given unfair priority.

The MPs stressed: “The Government needs to take immediate action to address public concerns about migration and to defuse tensions before they lead to disturbances.”

The report by the Communities and Local Government Committee is the latest in a growing list of damaging studies warning that Labour’s open-door immigration policy has piled pressure on our towns and cities.

Sir Andrew Green, chairman of Migrationwatch UK, said: “The Government still does not get it.

“It is not a question of managing local impacts, it is a question of a massive impact on our whole society from having to build the equivalent of seven Birminghams in the next 25 years.

“Until the numbers are brought under control, the Government is just fiddling at the edges.”

The Shadow Minister for Community Cohesion, Baroness Warsi, said: “This report is yet another indictment of the problems caused both by the Government’s failure to control the numbers of migrants coming into this country and by its inability to know where migrants are living and to fund local authorities accordingly.”

The committee’s study said  concerns “cannot be simply dismissed as expressions of racist or xenophobic sentiments”.

Increasing competition for limited public resources is risking community cohesion, it warned.

And it added that its inquiry had found “new patterns of racial prejudice and hostility between settled Asian and Caribbean communities and new ethnic minorities.”

It also repeated the findings of a Mori poll which showed that a quarter of the public feel local areas are losing their sense of Britishness.

The MPs attacked the Home Office’s plan for a levy on immigrants – possibly £60 – saying it would equate to 0.001 per cent of total local government expenditure in 2005-06.

But Immigration Minister Liam Byrne said: “We propose that the fund should raise tens of millions of pounds.

“This vital cash will allow us to channel money quickly to public services wherever there is short-term pressure from migration.”

A spokeswoman for the Department for Communities and Local Government said: “We recognise that migration can  bring challenges.

“That’s why we’ve established a £50million cohesion fund to support local authorities in managing the impacts of migration.

“We have also provided additional funding to help manage the transitional impacts of migration, such as £10million for schools experiencing increases in pupil numbers.”

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