Angela Rayner has dropped Tory plans to limit applications for social housing to long-term British residents.
The Housing Secretary has formally scrapped reforms that would have prevented recently arrived migrants from applying for a council house in England.
It comes with almost 1.3 million households on local authority waiting lists for social housing.
Ms Rayner has vowed to ramp up the provision of new social homes as part of wider planning reforms to boost housebuilding.
Official government figures show that in 2022-23, the number of new social lets agreed where the “lead tenant” was a foreign national was 26,176.
Under current rules people from abroad need to have an immigration status “with recourse to public funds”, such as being eligible for access to benefits, in order to qualify for a social home.
This can include refugees who have had their asylum applications approved as well as migrants who have been granted indefinite leave to remain.
Michael Gove, the former housing secretary, published proposals in January that would have prevented many of those from qualifying in future.
He planned to introduce a “UK connection test” which would have restricted social housing to those who had been resident for at least 10 years.
British and Irish citizens, Commonwealth citizens with a right of abode, and European citizens who were resident before Brexit would have remained eligible.
The test would have been applied to those people on the waiting list, affecting many foreign nationals already in the queue for a social home.
Matthew Pennycook, the housing minister who reports to Ms Rayner, announced last week that Labour would not be going forward with the proposals.
“The Government does not intend to enact the policy proposals set out in the consultation,” he said in response to a written question from Kemi Badenoch.
Official statistics show that 251,866 social homes were made available in 2022-23, of which one in 10 went to a non-UK national.
Of those, 9,824 went to people from the European Economic Area – the EU plus Norway, Iceland, Liechtenstein and Switzerland – and 16,352 to people from the rest of the world.
The share of social homes granted to foreign nationals has almost doubled over the past 15 years from 5.8 per cent in 2009-10 to 10.4 per cent in 2022-23.
Government figures only show who the “lead tenant” is, meaning that British citizens may be living in some of those homes.
Many migrants do not qualify for social housing, including small boat arrivals who have not yet had their asylum applications processed.
Economic migrants on work visas and foreign students do not have recourse to public funds and are therefore not eligible either.
But the Government is set to fast-track the asylum applications of 90,000 illegal migrants who had been earmarked for deportation to Rwanda.
It is expected that two-thirds of them will be granted the right to remain, meaning that they could then qualify to apply for social housing.
Many would struggle to quickly get a social home though because nine in 10 councils require applicants to have lived in their local area for some time.
Dr Mike Jones, executive director of Migration Watch UK, said around one in five council homes is now occupied by a foreign national lead tenant, including nearly half in London.
“Labour has no plans to cap legal migration or change the Human Rights Act to allow deportations of illegal entrants,” he said.
“They’ve also dropped the ‘British homes for British workers’ policy, which would have given priority to people born in the UK.”
“This hits hard at public trust in our institutions and the fairness of the welfare system.
“Labour isn’t putting the ‘national interest’ first – they’re putting non-citizens ahead of British people.”
Government sources suggested that under the Tory reforms most European citizens would have remained eligible for social housing.
Those who arrived before June 30 2021 were able to apply for “settled status” giving them equal treatment rights to UK citizens under the Brexit withdrawal deal.
A spokesman for the Department for Levelling Up, Housing and Communities said: “The vast majority of councils have already adopted local connection tests and 90 per cent of social homes go to UK nationals.
“Those who do not have a right to stay in the UK are already not eligible for social housing.”
A Tory spokesman said: “It just goes to show that Labour will always put cosying up to the EU ahead of protecting British values like common decency and fairness.”
