Libya's collapse since the overthrow of Colonel Gaddafi has turned it into a potential security threat to the UK, the Foreign Affairs Committee says.
The group of MPs warn that fighting in Libya has allowed Islamic State (IS) extremists to become influential there.
Illegal migration from Libya could help IS to stage attacks in Europe, MPs say.
Also, the International Development Committee says youth unemployment in developing countries may cause unrest that could lead to a rise in extremism.
The Foreign Office said it was working closely with British allies and the United Nations to "help deliver a lasting political settlement that will bring an end to the violence" in Libya.
Numerous militias each govern their own patches of territory in Libya, with successive governments struggling to exercise control.
The Foreign Affairs Committee said there was a "particular responsibility" on the UK to help Libya "repair itself" and restore a stable government.
The UK supported anti-Gaddafi rebels with air strikes during the struggle to end his regime. The Libyan leader was eventually killed in in October 2011 but subsequent attempts at establishing a democratic government have failed to bring stability.
"The fact that [IS] appears to have taken advantage of the chaos in Libya to establish itself there is a security concern reaching beyond Libya, and is further motivation for the international community to provide assistance," the committee said.
"Illegal migration through and from Libya is undoubtedly a major concern, not least because of a potential security threat from terrorists who could use this means to travel to Europe to conduct attacks."
By Bridget Kendall, BBC diplomatic correspondent
A slew of parliamentary reports, all warning of the same thing - that we live in an increasingly unstable world, and however much Britain's government might feel its priority should be cutting the budget, it cannot ignore the fact that threats are multiplying.
In part this is the rush to get parliamentary reports out before the House of Commons goes into recess ahead of the general election in May.
Those MPs who focus on Britain's foreign and security policy want to send a strong message to whoever forms the next government.
But it also reflects an underlying sense of unease that Britain seems to have drawn in its horns to concentrate on immediate problems closer to home - the need to cut spending to plug the gaping hole in the country's finances, the need to make trading links a priority to try to boost British exports.
This comes at the very time when the world seems to be coming more dangerous, and investing in analysing and forestalling global challenges seems ever more important.
Rory Stewart, the Conservative chairman of the Defence Select Committee, said: "I am afraid in a more dangerous world, you have to spend more on defence, and in the long run that's in your interest.
"Because an unstable world in which refugees are spilling across into the Mediterranean, when 20,000 foreign fighters are turning up with [Islamic State,], this is a world which is really worrying."
Also, a new parliamentary report by the International Development Committee has warned that widespread youth unemployment will be a "ticking timebomb" in global nations over the next 10 years, and could lead to social and political unrest,
Its report said that "one of the greatest global problems" of the coming decade would be caused by a shortage of full-time jobs and the difficulty that rapidly-increasing populations of young people will face in earning a livelihood.
It called on the government to address the issue through its aid spending.
Committee chairman Sir Malcolm Bruce said neither national governments nor donor agencies were doing enough to defuse the problem of youth unemployment.
"The complacent assumptions about population growth slowing are being proven wrong and we need to see that this is now a situation that needs to be addressed with the same kind of passion as children's vaccinations or humanitarian emergencies," he added.
Meanwhile, the Commons Defence Committee said more defence capabilities were needed to provide a convincing deterrent to further aggression by Russian president Vladimir Putin.
It said failure by the UK to maintain the defence spending target of 2% of national income, set by Nato, risked undermining the alliance.
UK defence spending is currently set to drop below 2% of GDP after 2015/16.
But Defence Secretary Michael Fallon said the committee's findings were "nonsense" and that the UK had the second largest defence budget in Nato and the largest in the EU.
"We are the US's largest partner in the coalition air effort against [Islamic State] - bearing more of the load in terms of strikes in Iraq than we played in either of the Gulf wars," he added.