A London local authority will pay up to half a million pounds to families it housed in bed and breakfasts for more than six weeks following an official inquiry.

A report by the Local Government Ombudsman published today found the local authority’s actions were unjust after it housed homeless families in B&Bs beyond six-weeks.

It is illegal to house families and pregnant women in B&Bs for more than six weeks, but early this year the council was still placing 171 families in such accommodation over the time limit.

Westminster said this month the number of families in B&Bs for more than six weeks had been cut to zero, apart from those who were not waiting to move or had their case under review.

The Ombudsman found the council was responsible for ‘maladministration causing injustice’ after 40 people in the borough registered complaints.

The council has offered to pay £500 to compensate each of the families who stayed in B&Bs for more than six weeks, plus an extra £500 for every additional six week period.

As Westminster understands the Ombudsman’s ruling will apply to those whose cases go back to 2011, the local authority has estimated it could end up paying out a maximum of £450,000 to families.

Jonathan Glanz, Westminster council’s cabinet member for housing, apologised to families that had stayed in B&Bs for more than six weeks.

‘Despite our extensive planning for the implementation of the housing benefit cap, we had not anticipated the severity of how the credit crunch would restrict supply and increase demand from people in the private rented sector,’ he said.

‘At times we dealt with more than give times the usual homelessness acceptances - up to 100 people each month. It was never going to be easy reforming housing benefit, particularly in an area like Westminster, where we have the second highest property prices in the UK.’

Local MP Karen Buck, who sent 37 of the 40 cases to the ombudsman on behalf of her constituents, said: ‘I have met with several parents who did not have access to cooking facilities and were struggling to afford to feed their children with unhealthy takeaway food.

‘It is not surprising that homeless families struggle to keep their children in school when they sometimes have to travel for two hours each way. Forcing vulnerable children to live in these conditions for longer than six weeks, in many cases over a year, is intolerable.’