Ministers have failed to prove the case for new powers that would allow more secret court hearings, an influential committee has said.
Government proposals extending the use of behind-closed-doors evidence are a "radical departure" from the British tradition of fair and open justice, the Joint Committee on Human Rights (JCHR) warned.
Its critical report into the Justice and Security Bill, which would allow judges to listen to more civil cases in secret without claimants being able to hear the evidence against them, also raised concerns about the potential for the reforms to be used to avoid "embarrassing situations".
Committee chairman Hywel Francis said: "We were disappointed that the Government failed to prove to us a pressing need to extend the use of secret evidence into civil proceedings generally.
"The Bill represents a very significant shift away from historic common law principles and Parliament should only accept such a departure when the necessity for it has been properly and persuasively justified."
The Government has said it is wasting millions of pounds of taxpayers' money on settling claims, some of which may have no merit, because it is unable to contest them as the evidence it would wish to produce is so secret that it cannot be revealed in an open court.
It comes after 16 terrorism suspects, including former Guantanamo Bay detainee Binyam Mohamed, received a multimillion-pound payout last November after they claimed they were mistreated by US and British security and intelligence officials.
But critics and civil rights campaigners say it will create a "secret justice system straight from the pages of a Kafka novel".
The committee criticised Home Secretary Theresa May for refusing to allow "special advocates" to have access to some information so they could assess whether secret trials were necessary. That would have provided the "best evidence" available to Parliament about whether there "really exists a practical need for the provisions", the report said.
Ken Clarke, minister without portfolio, said: "The case for these new powers is proved by the case of the former Guantanamo Bay detainees. In that case, the taxpayer settled the claims because it was quite impossible for the judge to hear the evidence in the Government's defence, or to give a judgment on liability. We now find ourselves faced with an ever-increasing number of cases where this problem will be repeated."