Updated figures show that HMPO is making a "surplus" of almost £13 on each application.
In January alone there were more than 550,000.
Keith Vaz, chairman of the Commons Home Affairs Committee, said officials should have realised in January action was needed to avert the current crisis caused by a surge in demand and said the profit should be recycled to help deal with application delays.
"Over the last 10 days HMPO has been gripped by what can only be described as chaos," declared the Labour MP.
"The figures we received today reveal the closure of the overseas posts has caused a significant increase in applications.
"This decision was clearly the wrong one and has been poorly managed. The public have been badly let down.
"It appears that the Passport Office is making a surplus of £13 on each application.
"It should not be profiting from the public's hardship," Mr Vaz insisted.