Migrants should not be prioritised for new council homes over “local people”, Labour MPs have warned Keir Starmer.

Some 200 local councils have registered an interest in a new scheme that could see the government pay councils to buy or renovate properties. They would then be leased out, and once the crisis is under control they could be used as part of the social housing stock.

But Labour MPs have blasted the plan, warning of an “acute shortage of council housing”.

Moving migrants into “dispersal accommodation” – houses, flats and bedsits – is a key part of the Home Office’s plan to close the remaining 197 asylum hotels.

Brighton and Hove, Hackney, Peterborough, Thanet and Powys councils are all amongst those to sign up for the pilot scheme.

Graham Stringer, Blackley and Middleton South Labour MP, said the plans are “unacceptable” as there’s already a “shortage of council housing that should be going to local people”.

Another Labour MP, speaking anonymously, said that the “bonkers” scheme “will go down awfully in Red Wall seats” – traditionally Labour seats in the North of England challenged by Reform UK.

“I’ve told the Home Office I’m against it and they need to U-turn on it in my seat. My problem is they won’t become council houses for years and when you have … a waiting list of 10,000 people – they will feel asylum seekers will be prioritised – never mind the loss of houses in our area.”

Jonathan Brash, Labour MP for Hartlepool, said: “We have an acute shortage of council housing, with local families and key workers stuck on waiting lists or in temporary accommodation. Any programme to build new social homes should be focused first and foremost on meeting that local need.”

The Sunday Express revealed how asylum accommodation provider Serco wants the Home Office to force town halls to accept more HMOs – houses of multiple occupancy – in their areas. The company said stuffing “three to six” people into a single property “offers the best value for money” for taxpayers. Some 36,273 migrants are staying in taxpayer-funded hotel rooms, while 66,232 are living in communities across Britain.

It has previously been revealed how the number living in “dispersal accommodation” could hit 100,000, under the Home Office’s controversial contracts with Serco, Mears and Clearsprings Ready Homes.

Serco, which provides homes in the North West, Midlands and East of England, warned communities that migrants moving into houses, flats and bedsits “will continue to be a central part of the asylum accommodation system”, despite the Home Office currently focusing on moving people into military bases.

A Government spokesman said: “New council housing will not be used by asylum seekers under any circumstances.

“This Government will close every asylum hotel. Work is well under way, with military sites brought forward to ease pressure on communities and cut asylum costs.”