The International Development Committee said money should be allocated "on evidence rather than media coverage".
Some programmes seemed to have been closed after bad headlines despite performing well during internal assessments, the committee said.
The government said aid spending had to be "accountable".
It said it would not "shy away" from "tough messages on reform".
In the report, MPs backed the decision to commit to spending 0.7% of GDP on foreign aid.
The 0.7% target, which was enshrined in law in 2015, has been criticised by some MPs and some aid projects have faced fierce criticism in media coverage.
The committee said it understood concerns that foreign aid, unlike most domestic spending, is protected.
But the MPs supported the move, saying "we have no doubt that there is sufficient need in the world for it to be necessary".
The report said "poor or wasteful spending" appeared to be no more of a problem for the department for international development than it was for other parts of Whitehall.
It said the department was subject to "intense media scrutiny and criticism".
While some of this had helped to uncover serious issues in UK aid spending, much had been "misleading about the nature of aid spending or about the contents of our own reports", the committee said.
"The media has a responsibility to be accurate and contextual given its role in influencing public understanding and opinion," it added.
The committee urged the department to "continue improving its communications and to be more proactive in publicising when it is doing good work".
It also said there had been a "shift in strategy" following the appointment of current International Development Secretary Priti Patel.
It highlighted how she had spoken of aid money being "stolen" and "wasted on inappropriate projects" but when asked to explain she "could not put a figure or a percentage on the amount which she thought was being wasted".
The committee urged Ms Patel to "lead the department in a way which displays the value for money and great impact of good UK aid spending".
It said: "While we commend and support the secretary of state's focus on improving the quality of spending, we think that the level of wasteful spending in the department is minimal.
"We would urge the secretary of state to ensure that assessments of what is and is not wasteful spending are based on evidence and robust reviews."
The committee also said the department had "changed its tone" since the Brexit vote last June, with a greater emphasis on economic development and trade.
It said this was an "important aspect of a comprehensive approach to poverty reduction" but that UK aid cash had to remain "completely untied" from trade.
In response to the report, the department said: "At a time when the world is facing numerous unprecedented humanitarian crises, saving lives depends on using UK aid in the most effective and accountable way possible."
It said the secretary of state's job was to "challenge the aid system to do more for the world's poorest".
It added: "Britain's place in the world is enhanced by our commitment to UK aid, but we should never shy away from delivering the tough messages of reform that will make a real difference on the ground."
MPs have denied accusations that a lot of foreign aid cash is "wasted" and have said that the government should do more to publicise its good work.