The Business Secretary said Immigration Minister Mark Harper’s decision to send vans bearing the message “go home, or you’ll be picked up and deported” round London was designed to create fear among the public.
He rubbished “misleading” targets to reduce net migration and insisted Britain did not have a vast problem with illegal immigrants.
Mr Cable said the Liberal Democrats had not been consulted about the van campaign. “It was stupid and offensive. I think it is very unlikely it will continue.”
He questioned whether illegal immigrants would have enough of a “sophisticated grasp of English” to be able to read the posters on the vans at a distance.
“I think it is offensive. It is designed, apparently, to sort of create a sense of fear (in the) British population that we have a vast problem with illegal immigration.
“We have a problem but it’s not a vast one. It’s got to be dealt with in a measured way dealing with the underlying causes.”
Mr Cable also responded to the criticism from the Public Administration Select Committee, which cast doubt on the accuracy of migration figures used by the Government.
Mr Cable said: “We are not a totalitarian state. We don’t count every single person but actually it’s quite difficult being an illegal immigrant in Britain.
“You can’t work, certainly legally, you can’t have access to benefits. So, the idea that there’s some vast, hidden army of people, is almost certainly completely wrong.
“The argument about those numbers, which was raised this morning by a select committee, it only really matters if you are pursuing some target. There’s this sort of net immigration figure, which the Conservatives are very preoccupied by. It’s not a Government objective, make it absolutely clear.
“This idea that you are pursuing a net immigration figure is very misleading because, amongst other things, the largest number of people counted as immigrants are overseas students, who are not immigrants, they are visitors but under the United Nations classification they are regarded as immigrants, but they are good for the country.
“So obsessing about this net immigration number is not helpful,” he said.
The select committee’s report finds that official migration statistics are “not fit for purpose and suggests assessments of Government progress in reducing net migration as “little better than a best guess”.
Analysis on how many non-UK residents are entering and leaving the country is primarily based on “random interviews” of travellers at ports and airports that were introduced to examine tourism trends, the Public Administration Select Committee found.
Just 5,000 migrants a year are identified through the International Passenger Survey and many “may be reticent to give full and frank answers”, it warned.
Although the Office for National Statistics (ONS), which uses the research to draw up its migration estimates, has “done its best” to produce informative statistics, the survey “is not fit for the purposes to which it is put” and Ministers must find new ways to gather information, MPs said.
In the year to June 2012, immigration was estimated at 515,000 and emigration at 352,000. The coalition aims to reduce net migration – the difference between the two figures – from the hundreds of thousands down to the tens of thousands by 2015.
But MPs warned the Government is at risk of ending up with an “inappropriate” immigration policy if it bases its target level of net migration on such an uncertain statistics.