Sir Keir Starmer was accused of planning to reopen hotels with asylum seekers set to be housed in taxpayer-funded rooms for up to three years.
There are nearly 30,000 asylum seekers living in more than 250 hotels at a cost of £4.2million per day £1.53billion per year.
By contrast, universal winter fuel payments for pensioners costs around £1.5billion each year.
Labour had hoped to "end asylum hotels" within a year, but sources have warned the backlog of cases is "much worse than we thought".
They added: "It's going to take a lot longer to clear than we anticipated. It certainly won't be cleared in a year." But a Conservative source who worked in the Home Office accused Labour of "lying", adding: "The stats are published quarterly.
Worse
"What they didn't anticipate was that their lack of a plan to actually do anything to stop the people smugglers would actually make things worse, and that's on them."
The revelation angered the Tories and Reform UK, with Shadow Home Secretary and leadership hopeful James Cleverly warning that Labour is "preparing to reopen asylum hotels".
He added: "Why? Because they scrapped Rwanda, have no plan and over 11,000 illegal migrants have crossed the Channel since Labour took office".
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