Home Office minister Seema Malhotra made the admission to a Lords committee as the government scrambled to address what it described as a "challenging" situation.
A company called Ecctis Ltd has been charging fees for language tests and qualification assessments and passing them on to the government since 2008 without any legal authority, leaving the system open to challenge in the courts.
The discovery was made when the government sought to renew the firm's contract earlier this year. The Home Office is now seeking to rush through legislation to make it legal to charge up to £400 for the tests.
Ministers are also looking at establishing either a "restitution" scheme whereby millions of pounds could be reimbursed to visa applicants, or tabling retrospective legislation to avoid a payout.
This story is from the {{IssueName}} edition of {{MagazineName}}.
Start your 7-day Magzter GOLD free trial to access thousands of curated premium stories, and 9,000+ magazines and newspapers.
Already a subscriber ? Sign In
This story is from the {{IssueName}} edition of {{MagazineName}}.
Start your 7-day Magzter GOLD free trial to access thousands of curated premium stories, and 9,000+ magazines and newspapers.
Already a subscriber? Sign In
Orders will restrict travel
The warrants relate to the Hamas attack on Israel on 7 October 2023 and the Israeli military response in Gaza.
'I cannot leave now' Guardiola says City's slump sparked new two-year contract
Pep Guardiola has signed a new two-year contract with Manchester City that will extend his tenure as the manager to 2027, with the Catalan stating the champions' current bad form stopped him leaving in the upcoming summer.
Furious drivers hit out at F1 leadership over radio silence
Formula One drivers are fed up and losing confidence in the FIA and the governing body's president, Mohammed Ben Sulayem, after receiving no response to their collective criticism of both in a public statement.
Broja closing in on long-awaited Everton debut
Sean Dyche believes Armando Broja is close to his Everton debut, with the club hoping to fast-track the on-loan Chelsea forward's return.
Vinicius calls for help in ongoing fight against racism
The Real Madrid forward Vinicius Junior has spoken about his fight against racism, describing it as an ongoing battle that he is happy to take on, but warning that he alone \"can't fight all that Black people have been suffering\".
Premier League vote hangs in balance as City tensions rise
Premier League clubs and officials were scrambling yesterday to secure support before a totemic vote on the competition's rulebook.
Maresca unsure of James return date after new hamstring injury
Reece James has sustained another hamstring injury and will miss Chelsea's Premier League visit to Leicester tomorrow, with his manager, Enzo Maresca, unsure about the time frame on the recovery.
Shaw has last laugh after double earns spot in final eight
Long has the Women's Champions League craved the sight of a jam-packed, vociferous, all-standing section of home supporters roaring their team on from behind the home goal.
Hurtig's late strike knocks Out Juventus as Arsenal progress
Lina Hurtig's late poke-in ensured Arsenal secured a spot in the Champions League knockout stage with two group games remaining, a 1-0 win over Juventus enough to put them clear at the expense ofthe Italian club.
'It's sad to see the state the RFU is in'
Former union chief executive Francis Baron urges game to 'wake up' to financial state amid potential record losses
