Councils across England are likely to take legal action to remove asylum seekers from hotels in their area following a High Court ruling on Tuesday.
The judgement granted a temporary court injunction to prevent asylum seekers being housed at The Bell Hotel in Epping, Essex.
Epping Forest District Council will return to court in the autumn to determine if the temporary ban will be made permanent.
Home Office lawyers have said the decision could "substantially impact" the government's ability to house asylum seekers in hotels across the UK if the ruling is made permanent.
They suggested preventing the use of the Epping hotel "runs the risk of acting as an impetus for further violent protests".
The BBC said the ruling will be a "political and practical headache for the government."
Labour has said it expects to empty the 210 hotels housing asylum seekers by 2029, but pressure will grow on ministers to find alternative accommodation at a greater pace than expected.