The rapid pace of immigration has significantly impacted on community cohesion and without better government funding, these tensions could escalate, a report by a committee of MPs said on Wednesday.
"The government needs to take immediate action to address public concerns about migration, and to defuse tensions before they lead to disturbances," the House of Commons Communities and Local Government committee said.
The committee said many migrants made significant contributions to local communities, working for public bodies such as the NHS.
But MPs said there was "significant public anxiety" about the pace and scale of migration which it said "cannot simply be dismissed as expressions of racist or xenophobic sentiment".
They said local residents had expressed concerns about overcrowded housing, an increase in anti-social behaviour and pressure on local services.
"The sheer pace of change experienced in some areas has escalated public concerns about migration to the point where migration has become the single greatest public concern in Britain, overtaking concerns on crime and terrorism," the report said.
Migration had put pressure on schools, social care, English language teaching, policing and the NHS, the study found, adding that problems were exacerbated by inadequate funding from the government.
The report said continued underfunding would raise community tensions as the "majority of people in the UK" believed that some groups, particularly migrants, received unfair priority in public services.
The government is planning to set up a transitional fund to help pay for local public services through fees levied on immigration applications.
But the committee said press reports had suggested this would raise only 15 million pounds, "a drop in the ocean" amounting to only 0.001 percent of total local government spending in 2005-6.
It said ministers should ensure proper funding of local services in areas affected by migration and should set up a contingency fund to address the current shortfall.
