The Government has granted British citizenship to foreign nationals with "very poor" immigration records, including violent killers.
A report from John Vine, independent chief inspector of borders and immigration, found "no attempts" were made to check an individual's criminal record in their country of nationality - even though it was policy to do so.
There were "virtually no other checks" to establish the good character of applicants apart from automated police and immigration tests, border inspectors said.
The gaps in the system allowed criminals to gain citizenship - like an asylum seeker who admitted to immigration officials that they had stabbed someone to death in their country but was still allowed to proceed.
Managers said the information about the killing had been stored in a paper file, which was not routinely checked.
Citizenship was also granted to people who were working illegally in the UK and in a quarter of cases referees submitted by an applicant did not meet criteria, but were still accepted.
Mr Vine said he was concerned that caseworkers were not scrutinising applications properly, calling some citizenship awards "unacceptable".
He said there was "far too much reliance" on self-declaration, so unless an applicant was completely honest about their criminal record or financial situation, it was very unlikely that the truth about their background would be uncovered.
In one case, Mr Vine said officials had made a "very poor decision" not to revoke the British citizenship of an applicant who used forged documents.
He said there was no evidence of the authorities considering prosecutions of people who used deception to win British citizenship, apart from a few organised crime cases.
And there were "significant delays" in dealing with deception allegations, the report found.
Mr Vine said: "The Home Office must ensure that it scrutinises applications properly and enforces the requirements of the Act. The granting of British citizenship is a profoundly significant step for both the individual and the UK."
Shadow Home Secretary Yvette Cooper said the report's findings were "completely unacceptable".
Immigration minister James Brokenshire said: "This Government is ensuring that the granting of UK citizenship is treated as a privilege for those who deserve it, not an automatic right for those who do not.
"The chief inspector's report endorses our decision to grant or deny citizenship in the overwhelming majority of cases it examined.
"Where it identifies errors, most of the issues raised are the result of wrong-headed decisions taken by the previous government before we scrapped the failing and dysfunctional UK Border Agency.