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Labour's plan to boot foreign criminals and migrants caught working illegally out of asylum hotels doesn't go far enough, ministers were told. Home Secretary Shabana Mahmood will revoke European laws to automatically provide arrivals with support.

From June, the handouts will become "conditional" and only given to those "who genuinely need it and follow the law". Those who work in Britain's black economy will also be thrown out of hotels, houses, flats and bedsits funded by taxpayers, alongside foreign criminals and those refusing to leave the UK voluntarily.

Officials believe it could act as a deterrent to those hoping to claim asylum in the UK and work illegally.

But Shadow Home Office Minister Katie Lam said: "Clearly, if people come to this country in order to seek asylum, they should, at very least, be expected to abide by the rules which govern that process.

"The changes that the Government are proposing today will not, without changes to the wider legal regime, change the incentives for people who come to this country illegally, or under false pretences, in order to seek asylum.

"In relation to illegal working, the Committee noted that illegal working cases accounted for just 0.3% - one in every 333 - of asylum seekers receiving support.

"The number of asylum seekers working illegally is likely to be higher in reality, and it is right that we deal with these cases - but alone, these regulations will not create a real deterrent for people who plan to come here illegally in order to seek asylum.

"Government ministers say that they are 'developing a policy on this' - yet every indication that we have had suggests that we can expect to see, at best, more tweaks at the edges of the system.

"What we need, and what the British people deserve, is a total overhaul of the way that we think about asylum."

Some 107,003 people are being supported by taxpayers, including some 30,657 living in asylum accommodation.

But more asylum seekers are living in houses, flats and bedsits across the country, new Home Office figures revealed.

Some 68,538 are living in dispersal accommodation, up from 66,232 three months ago.

Asylum minister Alex Norris defended Labour's plan, insisting they were "necessary".

He told MPs: "These reforms are necessary to ensure that asylum support functions effectively now, and is resilient enough to meet future pressures.

"In delivering them, this reinforces public trust and maintains a system that is both compassionate and credible and promotes compliance with the rules.

"The Government's position is straightforward. Fairness for those who need support, who follow the rules, but firm action when the rules are not followed and a clear duty to the taxpayer to fund the system".