The Department for International Development (DFID) has allocated £120 million in aid to Nigeria this year, despite the fact that the country is a major oil producer.
The international development committee has backed that funding in a new report published today.
In 2001-02 the DFID budget for the country was £20m.
The MPs said the present level of funding is appropriate given "the regional significance of Nigeria to West Africa, its close ties with the UK, and the scale of poverty in the country".
However, the committee said it would not be "sensible" to increase aid while corruption and poor governance remain such significant barriers to poverty alleviation.
Nigeria is the most populous country in Africa.
More than half of its 150 million people live in poverty and one in five children dies before the age of five.
Malcolm Bruce, chairman of the international development committee, said:
"The scale of the need in Nigeria is clear.
"We were concerned to learn that some of the states in northern Nigeria have the worst human development indicators of any region in the world which is not affected by conflict.
"The maternal mortality rates are particularly shocking.
"Nigeria has 2 per cent of the world's population but suffers 10 per cent of global maternal deaths.
"New strategies have to be found to ensure that maternal health services are available and that cultural obstacles which prevent women gaining access to them are overcome."
The committee praised DFID's focus on building the capacity of Nigeria's federal, state and local governments and its Growth and Employment in States (GEMS) programme to address unemployment.
"Nigeria has been described as an oil-ruined country," Bruce said.
"Oil has distorted the economy and discouraged growth in other sectors.
"Competition for a share of oil wealth dominates politics, feeds corruption and diverts attention away from improving governance and providing the basic services which Nigerian people need.
"The Nigerian government needs to do more to ensure that oil wealth is used to fund the country's development."
The committee said DFID "must ensure that it is able to demonstrate that its investment is making a worthwhile contribution to improving the lives of Nigeria's poorest people".

Dods Parliamentary Communications Ltd