Everything we did was on the firm understanding that our costs would be covered

Councillor Richard Kemp

Councillor Richard Kemp, Liverpool's executive member for housing and neighbourhood services, said: "This is a farcical situation. We were the first northern authority to come to the rescue of the Home Office and overloaded councils in the south.

"It was an emergency. Official arrangements had not been agreed at that stage but everything we did was on the firm understanding that our costs would be covered.

"The people of Liverpool have proved their willingness to accept asylum-seekers - often when no-one else would. But we are not a charity. We cannot afford to bear the brunt of unfulfilled obligations from the Home Office.

"To make matters worse, they have ignored our repeated requests to place asylum-seekers through the council. Instead they have put 1,000 directly into private hands - and unsatisfactory conditions - and we have been left to pick up the pieces."

'Budget limit'

Liverpool housing officials are now concentrating their efforts on the estimated 1,000 asylum-seekers already in the city.

Cllr Kemp, speaking at the Liberal Democrat party conference in Bournemouth, said: "They have been put in the city by the government, often in the wrong housing, in the wrong areas, with the wrong landlords. We have got to divert our efforts to clearing up the mess made by the Home Office."

Yet again you see the shambles Jack Straw has made of asylum policy

David Lidington Tory spokesperson

He added: "But we remain determined to give the best possible service."

A Home Office spokesman said: "The government set a budget limit for all authorities supporting asylum-seekers. We always made clear that councils would not be reimbursed if they exceeded those limits.

"The majority lived within the set costs but we have asked the Audit Commission to investigate why the others did not."

Conservative front bench home affairs spokesperson David Lidington said: "Yet again you see the shambles Jack Straw has made of asylum policy.

"Asylum seekers should be the responsibility of a national government.

"William Hague has set out clear proposals for cutting the queues and dealing effectively with the problem of unfounded asylum claims.

"Jack Straw should stop blaming local authorities and put right his own policy failure."