How can I do a literature review efficiently? For a new project I want to compile a literature review to determine the state of the art and possible approaches to start with.

Last time I adhered to the following scheme, but it felt very inefficient.


Search scholar.google with relevant keywords. (3-20 papers)
Read this first set of papers and look for main publications most of these papers link to.
Use scholar and webofknowledge to collect all papers, which cite the main publications. (30-200 papers)
Go through all the papers ordered by assumed importance or newness and note used methods, results, strengths and weaknesses in a spreadsheet till running out of time or motivation.


What system do you have to do literature review and what would you recommend me?

[update] 

After posting my question I found Am I reading enough of the scientific literature? Should I read for breadth or depth? which talks, as I see it, more about how to read scientific publications. 

I am more interested in advice on how to make sure one has found all the important publications and how to prioritize one's reading list. One advice I got some time ago was to start with new publications fist and then to work yourself back in time. Is this a good advice? How do you do it?
If you know that the relevant literature is mostly in one community, then the approach you've described works fairly well. It may be "inefficient" if there are lots of related papers, but (to use computer science jargon), it's efficient in the size of the output :)

I have found that finding a recent survey helps a lot, because it taxonomizes the literature and provides many backward pointers (as well as forward pointers via papers that cite it). 

But ultimately, the best test is if you start coming across the same papers in references over and over again. At that point you can feel a little more confident that you're converging. 

Some specific tips:


Look carefully at how papers are cited. That provides clues on how to prioritize your searching. 
Learn how to skim a paper really quickly to see its main contribution, which will indicate whether it merits further interest. 
If certain researchers keep popping up, go to their websites to see if other papers might be relevant (or if they have a review article that Google search didn't reveal)
Look at venues where papers are typically getting published, and look at recent issues of those journals/conferences to see if you've missed something.


Apart from that, going across communities is trickier, and often requires some luck, or the right keywords. Again, some knowledge of the researchers in the area helps: odds are that if the topic spans disciplines, at least some of the researchers involved also span disciplines and can point (via their work) to new paths to explore (see the above note about conferences)