The Home Office has not acted as a result of repeated warning signs of Windrush's shortcomings and has not yet established the extent of the scandal, noted a major new report.
The Whitehall watchdog said the department was aware of "credible information" about possible problems up to four years ago.
According to the National Audit Office (NAO), the official impact assessments on "hostile environment" measures did not sufficiently take into account the risk of unjust consequences.
He completed some Home Office processes that contributed to the risk of illegal detentions and removal.
Sir Amyas Morse, head of NAO, said: "The treatment of people who had a legitimate right to stay in the United Kingdom raises serious questions about how the Ministry of the Interior has fulfilled its duty towards people made vulnerable due to lack of documentation.
"He failed to protect their rights to live, work and access services in the United Kingdom, and many suffered anguish and material losses as a result.This was both predictable and felt.
"The department is taking steps to put things right for the Caribbean community, but it has shown a surprising lack of urgency to identify other groups that may have been affected."
Ministers faced a violent reaction to the treatment of the Windrush generation – from the name of a ship that brought migrants to Britain from the Caribbean in 1948.
Commonwealth citizens who arrived before 1973 automatically received an indefinite leave to stay, but many were not released with any document confirming their status.
A public protest broke out at the beginning of this year after its appearance long-term residents of the United Kingdom have been denied access to services, held in detention or removed despite living legally in the country for decades.
The scandal has aroused criticism of the "hostile environment" measures introduced to counter illegal immigration, now indicated by the government under the heading "compliant environment".
The NAO claimed that the Ministry of the Interior "did not give credible information on issues that may have contributed to the Windrush situation".
He cited a 2014 report by the Legal Action Group, which reported the potential negative impact of immigration policy on certain groups, including Jamaicans who arrived before 1973.
In addition, Caribbean ministers raised Windrush cases with the government in a forum in April 2016, while inspection reports highlighted problems including the possibility of people being sanctioned due to incorrect data.
The NAO said: "We believe there have been warning signs from quite different sources, for quite a long period, to collectively point to a potential problem that deserved further investigation."
A 2016 recommendation to "clean up" a database of people mistakenly marked as illegally in the UK has been ignored, the guard dog added.
He discovered that the Ministry of the Interior has not yet established the full scope of the problems afflicting people of the Windrush generation.
An official review of 11,800 cases of people from the Caribbean Commonwealth identified 164 people who were removed or detained and who could have been resident in the United Kingdom before 1973.
The department has apologized to 18 people in whose cases he believes it is more likely to have acted unfairly.
NAO said there were no plans to review about 160,000 files for non-Caribbean Commonwealth citizens based on what would be "disproportionate".
"In the circumstances, we find it surprising," says the report.
He also revealed that at least 25 people may have been wrongly sanctioned based on hostile environmental policies, such as revoking a driver's license.
The Ministry of the Interior has had targets for the removal of illegal immigrants since 2004, the report noted, but said that there is insufficient information to conclude whether this contributed to Windrush.
Meg Hillier, chairman of the Public Accounts committee, said that the impact on those treated unjustly was "immense", adding: "It is shocking that Home Office does not proactively review cases of others citizens of the Commonwealth ".
Home Secretary Sajid Javid has issued a profound excuse to the Windrush generation and is "absolutely determined to correct the wrongs of the past," said the Ministry of Interior.
A spokesperson for the department said: "As the NAO report recognizes, our task force has taken thousands of phone calls and helped over 2,400 people of all nationalities to demonstrate their status in the UK.
"Most of those who are helped by the task force are of Caribbean origin, but we have always been clear that they accept applications from the Windrush program from people of any nationality who arrived in the United Kingdom before December 31, 1988 and established here.
"We have worked hard to increase awareness of the support offered in a" wide range of communities ".
An independent review of the "lessons learned" was launched and details of a compensation plan for those affected will be outlined in the new year, the spokesperson added.