The study, which drew on the expertise of technology specialists in a wide range of industries, said the government has substantially underestimated the cost of biometric readers and the cost of registering the population.
It also called into question the government's estimates of the cost of securing the system against attacks and safeguarding personal data. The study said the operational and implementation costs would be much higher than the government has allowed for.
The LSE warned that biometric technology is not a foolproof means of identifying people. All biometrics, including fingerprints and iris recognition, have been successfully spoofed by researchers using relatively simple techniques.
Estimates by the US government suggest that between 2% and 5% of the population will not be able to have their fingerprints taken electronically because their fingers have become dry, or warn with age, manual labour or exposure to corrosive chemicals.
Barclaycard found that fingerprint biometrics as a means of identification were too unreliable, as people with hard or calloused skin, or people who had recently used hand cream, were difficult to read.
Iris recognition systems could also cause problems, with one in 200 people unable to enroll using the technology and between one in 18 and one in 50 people failing to be recognised by the technology once they have enrolled.
Research has shown that iris recognition does not work for people with glaucoma or cataracts, blind people or diabetics with severely damaged eyes, potentially representing one million people in the UK, the LSE report said.
Trials have also shown that failure rates for facial biometric systems would mean that every tenth ID card user would not be recognised and would have to be subject to further tests.