The invention discloses a water-soluble hot-melting adhesive interlining with very low shrinkage rate and a production method thereof. Dimensional change rate in the warp and weft direction after washing is -0.6%-0.5%. After the hot-melting adhesive interlining is combined with fabric through pressing, time for separating the hot-melting adhesive interlining from the fabric in 35-DEG C water is less than 15 seconds. Free and hydrolyzing formaldehyde is equal to or less than 35 mg/kg. The production method sequentially includes seam inverting, singeing, desizing, scouring, bleaching, secondary bleaching or dyeing, post-processing, liquid ammonia finishing, shrink resistant finishing, mechanical pre-shrinking and powder dot coating. The shrinkage rate in the warp and weft direction is low, water-solubility is good, the free and hydrolyzing formaldehyde amount is the minimum, and the production method is easy to operate.