Sir Michael said that the promise to finally bring immigration down to manageable numbers was “an ambition” and refused to set a timetable for it to happen.
His comments led Ukip to claim that the Tories are "taking the British people for mugs".
The Tory manifesto retained the target, which has never been met since being introduced by David Cameron.
Michael Fallon blocks EU army plans as Brexit talks loom
Fallon says ‘there is NO deadline’ for Tory plan to slash immigration
The policy document said the current annual figure of 273,000 people heading to Britain – the equivalent of a city the size of Newcastle – was "still too high" and promised to slash the number to "sustainable levels".
Challenged how much the cost of cutting immigration would be, Sir Michael said: "There has been various academic work done on the cost of immigration.
"We have made it clear we accept there is a cost and we want to make sure that British companies do contribute to the training of British workers when they want to fill that post."
Sir Michael Fallon seemed to water down the Tories' immigration goals
A separate blew up over the alleged cost of reducing migration with claims quoted by the BBC that it would cost £6 billion.
It's an ambition, and we have had it in previous manifestos
Sir Michael Fallon
The Corporation – which has recently been criticised in an independent report for its anti-Brexit bias – suggested that findings by the independent Office of Budget Responsibility (OBR) suggested reducing immigration would cost billions.
But Migration Watch today produced evidence that in fact mass migration cost the UK £100 billion between 1995 and 2011 and reducing the number of incomers will save the country money.
Migration Watch chairman Lord Green of Deddington said: “This figure of £6billion is not only dubious, it takes no account of how a post Brexit immigration policy would actually work in reducing immigration by low paid workers.
The defence secretary said British companies should contribute to the training of British workers
“They are of least benefit, indeed many are likely to be a cost, to the British taxpayer. What is more, no account is taken of the additional pressures on housing, health, transport and other public services which are of real concern to people’s everyday lives.”
Pressed on the cost on BBC Two's Newsnight, Sir Michael said: "We haven't set out a formulation of how much it will reduce by each year, what we have set out is our ambition to continue to bear down on immigration."
He added: "It's an ambition, and we have had it in previous manifestos."
The pictures politicians may not want you to see from the campaign trail
Thu, May 18, 2017
Protests, fights and daleks, it's all happening as the politicians hit the campaign trail for the snap election
1 of 43
Demonstrations take place before the arrival of Prime Minister Theresa May as she launches the Conservative Party Election Manifesto on May 18, 2017 in Halifax
Under the plans set out in the manifesto, companies employing migrant workers will see the Immigration Skills Charge doubled to £2,000 a year by the end of the parliament, with the revenue generated to be invested in higher level skills training for UK workers.
The party hopes the plan will deter businesses or government from avoiding their "obligations to improve the skills of the British workforce".
There are also proposals to seek recommendations about better aligning the visa system with industrial strategy, with the intention of enabling the government to "set aside significant numbers of visas for workers in strategically-important sectors" without adding to "net migration as a whole".
John Bickley accused the Conservatives of of not having a detailed immigration plan
Overseas students will remain in the immigration statistics but the manifesto sets out plans to heighten requirements for students hoping to remain in the country to work after their course has finished.
Ukip's immigration spokesman John Bickley accused the Tories of "taking the British people for mugs".
Mr Bickley said that the proposal to slash annual net migration set out in the Conservative manifesto did not include a deadline for delivery, saying there was "no detailed plan".
Defence Secretary visits UK nuclear submarine
Fri, January 22, 2016
Defence Secretary Michael Fallon visits HMS Vigilant, one of the UK's four nuclear warhead-carrying submarines at Royal Navy’s Faslane nuclear base on the Clyde.
1 of 17
Defence Secretary Michael Fallon visits HMS Vigilant at HM Naval Base Clyde, also known as Faslane in Scotland
He said: "I was shocked to hear Michael Fallon effectively just brush off the fact that after six years of talking about bringing immigration down to the tens of thousands.
“I looked at their manifesto and actually I couldn't find the immigration section at first – it's at the back end of the manifesto, it doesn't even have a chapter heading.”