This - the second condemnation in five days of the UK's treatment of those fleeing persecution - deepens the gulf between the judiciary and the Government and undermines the unprecedented clampdown on would-be refugees.
Last week the same court said that Peter Lilley, the Social Security Secretary, had exceeded his powers when he withdrew all welfare benefits from most asylum seekers, describing the move as "draconian" and one "no civilised nation" should tolerate.
Mr Lilley's response was to announce emergency legislation to overturn the court's ruling, rather than appeal. But yesterday's judgement will fuel opposition to the changes being rushed through as amendments to the Asylum and Immigration Bill during its third reading in the Lords.
Labour and immigrants' rights groups, with wide support in the Lords, described Mr Lilley's action as an "abuse of process" and "immoral". After yesterday's ruling they called on the Government to rethink the plans.
But the Prime Minister yesterday defended the Government's policy towards asylum seekers, telling the Commons: "I believe that it is widely accepted that our policy is right. It removes benefits from three groups of people: illegal immigrants, people who enter this country on condition that they said they could support themselves and people who have already been found not to be genuine refugees."
Yesterday's ruling centred on four London local authorities, who, because the Government had withdrawn housing benefit, had withdrawn emergency council housing. But the ruling said that the authorities must treat penniless asylum seekers as in "priority need" and not leave them on the streets.
Lord Justice Simon Brown said: "I see no good reason why someone likely to suffer 'injury or detriment' through a total inability to clothe, feed or shelter himself should be any less entitled to priority housing than someone vulnerable through age or disablement."
The court said it had "the greatest sympathy with the difficulties faced by the housing authorities who have limited means to discharge their many responsibilities".
But they had erred in law by construing the provisions of the 1985 Housing Act in such a way as wrongly to exclude asylum seekers from the category of persons who had a priority need for housing.
Chris Holmes, director of Shelter, said the ruling highlighted the "crazy contradictions" in current benefit policy. "This judgement shows that while one department is slashing benefit and creating a new group of vulnerable people, another department is forced to pick up the tab."
About 8,000 people have been denied benefits since the changes were first introduced last February and refugee charities say many have had to choose between returning to the countries where they feared for their lives - or staying in Britain as "beggars of the worst kind".Reuse content