Ministers are to inflict a double blow on asylum seekers – breaking a promise both to release more than 1,000 jailed refugees by Christmas, and failing to bow to pressure to scrap the much discredited asylum vouchers scheme.
The Independent on Sunday revealed last month that hundreds of would-be refugees, many of them victims of persecution, are being held alongside hardened criminals, even though they are innocent of any wrongdoing.
The practice has already led to hunger strikes among asylum seekers in Liverpool, Cardiff and Rochester jails. It has also prompted Home Office Minister Lord Rooker to promise that they will be released by the end of the year.
Now, however, the Home Office has admitted this will not happen, and that asylum seekers at only one jail, Cardiff, will be out by then.
Britain is the only country in Europe that jails asylum claimants, a policy that has provoked condemnation from the United Nations High Commission for Refugees and Amnesty International.
There is evidence that the claimants have been verbally and physically abused by prison staff, while torture victims are thought to be at risk of further psychological damage as a result of their continued imprisonment.
Ministers admit that jail is inappropriate for asylum seekers, but argue they have no choice because Britain's 770 secure places are already full. They are locked in up to 23 hours a day, with only limited access to solicitors.
A spokeswoman for the Home Office said Lord Rooker's promise only applied to Cardiff jail, but admitted that the initial statement "had not been clear".
The Government's policy on asylum seekers is under attack from trade union bosses, who are furious that ministers intend to continue to use the hated asylum vouchers.
The Transport and General Workers' Union, led by Bill Morris, intends to use its motion at the Labour Party conference in Brighton next month to highlight the plight of asylum seekers forced to use vouchers. It will urge the Government to scrap them.
But The Independent on Sunday has learned the Government has no intention of doing way with the voucher scheme, despite opposition.
A T&G source said: "We have been told that the decision has not been made yet. But we won't accept anything less than the abolition of the whole scheme. That's our position and we have not changed it. We have not been given any assurances about it." A number of backbench Labour MPs and ordinary party members support the T&G's position.
A Labour Party source said people felt "uneasy" about the policy. "I think we can probably live through that," he said.
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