London councils are split on whether to take part in a £200 million scheme to build social housing for asylum seekers.
In a push to end the use of migrant hotels, the government is proposing a pilot that would see town halls handed cash to construct new homes or refurbish old buildings to provide accommodation for migrants.
Hackney has said it is interested in being included as it works to become a “Borough of Sanctuary” and a “place of safety and inclusion for refugees, migrants and people seeking asylum”.
Other London councils are also understood to be among the 200 UK local authorities keen to take part.
But the proposals are controversial, particularly in the capital where housing costs are high.
Hillingdon Council, which has the largest number of refugees living in contingency accommodation is the country, has said it will not take part in a program that “prioritises asylum seekers ahead of longstanding residents”.
The borough has a high number of hotels due to its proximity to Heathrow Airport and sees more than 2,000 people placed in them at any one time.
Steve Tuckwell, Hillingdon's cabinet member housing, said: "The council cannot agree to a housing support scheme which prioritises asylum seekers ahead of longstanding Hillingdon residents.
“Like the rest of London, demand for housing is already exceptionally high, driven by rising private rents, a shortage of affordable homes, developers stalling on construction and wider national pressures.
“While we have a pipeline of developments under construction and are rapidly acquiring properties to help us create more much-needed affordable homes, the demand continues to outstrip supply, and many eligible residents are faced with long wait times for a suitable council home.”
Mr Tuckwell added that the council currently spends about £70,000 a day providing temporary accommodation support.
“Diverting new council homes away from addressing this local need would significantly further increase the pressure on our services and the costs to residents,” he said.
"Providing support to asylum seekers is a national responsibility, however, Hillingdon taxpayers already shoulder an unfair financial burden due to inadequate funding by the government for the council's asylum and immigration responsibilities as a port authority.
"We have repeatedly called on the government to urgently address this funding shortfall as no local authority should be expected to take on additional pressures without appropriate funding or regard to local circumstances.
"Hillingdon continues to remain a tolerant and diverse borough, and we will continue to protect the best interests of all our residents."
The project is part of a Home Office plan to reduce the amount of money being handed to private landlords or spent on asylum hotels, which cost the taxpayer an average of about £5.77 million per day last year.
Thanet District Council in Kent has also been named as one of the local authorities being assessed to take part in the scheme, along with Brighton and Hove, Peterborough and Powys.
A Hackney Council spokesman confirmed to the Standard that the borough had expressed its interest in being included in the project.
The local authority has said it “is facing a serious housing crisis” with around 8,500 families on its social homes register.
House prices in the borough have increased sevenfold in the last 20 years ago.
West Berkshire Council last year used £3.6 million of funding from the government’s Local Authority Housing Fund to turn a disused office block in Newbury into flats for refugee families from Afghanistan and Ukraine.
Once the resettlement schemes end, and the tenants are moved into permanent accommodation, the apartments will become part of the council’s temporary housing supply to help reduce its reliance on private landlords.
Liberal Democrat councillor Denise Gaines, the town hall’s executive member for housing, said at the time: “It's been wonderful to watch these empty offices transform into five new apartments for families in need of a place to call home.
“It will give them a sense of belonging and a place of their own as they continue to rebuild their lives in West Berkshire.”
