But Treasury documents show that taxpayers will still be shelling out £2.5 billion in 2028/2029 on asylum.

Spending plans also show the Home Office will spend 3.6 billion on asylum in 2025/2026, £3.6bn in 26/27 and £2.9bn in 27/28.

Border Security and Asylum Minister Dame Angela Eagle said on Tuesday revealed ministers want to use more abandoned tower blocks, “old teacher training colleges”, or former student accommodation as a substitute for hotels and renting properties.

And more migrants are set to be housed in “dispersed accommodation” – houses, flats and bedsits.

Shadow Home Secretary Chris Philp said: “Even Labour knows they aren’t going to smash the gangs.

“This year so far has been the worst ever for illegal immigrants crossing the channel, and these figures show the government think that is going to continue for many years to come.

“This is a weak Government which has already given up on illegal immigration.”

Mr Philp added: “Labour have slashed the Home Office budget in the middle of a border crisis.

“Their entire budget is built on an assumption that the hotels magically empty themselves.

“Yet there are more immigrants in hotels than when they took office, and they still have no plan for where these people will go.”

The analysis comes as Ms Reeves confirmed every migrant hotel will be closed by July 2029.

The Chancellor said an extra £200m will allow the Home Office to “cut the asylum backlog, hear more appeal cases and return people who have no right to be here”.

This could save taxpayers £1bn a year, Ms Reeves has claimed.

The Chancellor admitted it could take ministers another four years to close every asylum hotel, despite fears over spiralling costs.

Some 32,345 migrants are currently living in taxpayer-funded hotels, costing an estimated £54,000 a year each.

It comes as more Channel migrants arrived in Dover this morning, taking the total past 15,000.

The Chancellor told MPs: “I can confirm today that led by the work of the Home Secretary we will be ending the costly use of hotels to house asylum seekers, in this Parliament.

“Funding that I have provided today including from the Transformation Fund will cut the asylum backlog; hear more appeal cases; and return people who have no right to be here, saving the taxpayer £1bn per year.

“That is my choice, Mr Speaker. That is Labour’s choice. And that is the choice of the British people.”

Chief Secretary to the Treasury, Darren Jones, blamed the asylum backlog for the 2029 deadline.

Ms Reeves has announced funding of “up to £280 million more per year” by the end of the spending review for the Border Security Command to “support the integrity of our borders”.

Chair of the Home Affairs Committee, Dame Karen Bradley said: “The cost of asylum hotels has grown to a staggering extent and if the Home Office budget is to be reduced this is where reductions will need to be made.

“This is easier said than done.

“If hotels disappear there will still need to be a stock of short-term accommodation to deal with unpredictable levels of irregular migration.

“Targets on their own are not enough, they need to be delivered – and for that we need to have workable solutions.

“Unless these savings are made there will be a knock-on effect on the ability of the Home Office to achieve its wider aims. Policing, immigration and counter-terror will all struggle to meet the ambitious targets the Government has set itself.”

Hundreds of migrants are feared to have been intercepted in the English Channel this morning.

Windy conditions have hampered crossings so far in June.

But people smugglers took advantage of calm conditions – despite the low visibility – with at least one inflatable picked up mid-Channel early this morning.

Migrants in orange life jackets were seen coming ashore at immigration processing centre at the Port of Dover’s Western Docks in Kent this morning.

They were brought into the harbour on the Border Force catamaran Volunteer.

A second Border Force vessel – Typhoon – came into the port soon after while another catamaran Ranger could be seen in mid Channel according to ship tracking site Marine Traffic.

French rescue vessels can also be seen positioned off the French coast.

Today’s crossings are the first since May 31 when a record 1,195 people in 19 boats were intercepted.

The total to cross so far in 2025 stands at 14,811 in 263 boats.

Mr Philp added: “15,000 illegal Channel crossings and its only June – 2025 is the worst year ever for small boat crossings so far. While traffickers and criminal gangs rake in millions, Labour Ministers stand in Westminster rehearsing soundbites. This is a total collapse of border control.

“How many more records does Keir Starmer need to break before he finally admits his plan is failing? He should never have scrapped the removals deterrent the previous Conservative Government put in place.

“Only the Conservatives have a serious, deliverable plan to end ECHR obstructions, introduce a binding annual cap on migration, implement measures to actual deter these crossings, and restore control of who comes into this country. Britain cannot wait any longer.”

Asylum seekers have been given houses in more than 80 per cent of council areas, a Home Office official admitted.

More migrants are being moved across the country to ease the burden on local authorities crippled by a lack of housing, overwhelmed health services and growing community frustrations.

Joanna Rowland, Director General of Customer Services at the Home Office, told a group of MPs the number of council areas with asylum accommodation has increased over the past year from around 70% to 81%.

Ms Rowland told the Home Affairs Select Committee: “One of the things we need to guard against is uncontrolled levels of dispersed accommodation.

“Another priority for the Government is levelling up the allocation of dispersed accommodation across local authorities.

“There has been success to-date, in that there is now only 19% of local authorities without any dispersed accommodation, up from 30% a year ago.

“But we need to do the hotel exit and the alternative accommodation in a highly controlled way because if it was just an edict to close hotels and get into dispersed [accommodation], then we would end up with an uneven concentration.

“Some local authorities, I know, are feeling that acutely”.

Some 32,345 migrants are staying in up to 210 hotels. By contrast, 66,683 are living in rented homes across the country.

The Chartered Institute of Housing warned a single migrant staying in a hotel costs £54,000 a year.

Border Security and Asylum Minister Dame Angela Eagle said ministers want to use more abandoned tower blocks, “old teacher training colleges”, or former student accommodation as a substitute for hotels and renting properties.

Ms Eagle added: “The idea is to move from hotels to this kind of thing, rather than old military bases.”