The National Audit Office – a spending watchdog- said the Government planned to build the detention centre near Bicester in Oxfordshire.
However, local opposition, a rise in costs and a fall in the number of people seeking asylum meant the project was no longer considered viable and plans for the construction were scrapped in 2005.
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The site in Bicester was to be the first of 10 such centres, which would be used to house up to 3,000 asylum seekers as they waited for an outcome to their respective cases.
The National Audit Office said the Home Office could have foreseen problems - and saved money - if it had worked in a "more co-ordinated and joined-up way".
The £59.9 million contract to build the centre was awarded to Global Solutions Limited (GSL).
After the project was abandoned, the Home Office paid GSL termination fees totalling £7.9 million, and £7.6 million for design work.
A total of £33 million was spent on the project to build the 10 centres.
The Home Office has claimed that the Bicester site is still a potentially viable site for any future centre.
(NS/JM)
