Failed asylum seekers are being forced to eat out of bins and sleep in public toilets because the Government has forced them into destitution, charities claim.
Amnesty International and Refugee Action said a new report was the first in-depth survey of poverty among people who lost asylum applications.
They said their study found thousands had been left with no means of support, including some who sleep in phone boxes, parks and lavatories. The groups said the Government was deliberately using destitution to drive refused asylum seekers out of Britain, but claimed it was actually having the reverse effect.
Asylum seekers' handouts are cut off 21 days after a final refusal is made on their claim.
Limited support is available after that point, but only if they agree to leave the UK voluntarily, the report says.
However, many feared to go home to countries such as Iraq or Somalia, it adds.
Amnesty director Kate Allen said: "Refused asylum seekers in our towns and cities are being reduced to penniless poverty - forced to sleep in parks, public toilets and phone boxes, to go without vital medicines even after suffering torture, and to rely on the charity of friends or drop-in shelters to survive.
"We need a more enlightened policy that would see refused asylum seekers who cannot be returned home rescued from their current impoverished limbo and allowed to stay and contribute to British society." Refugee Action chief executive Sandy Buchan said: "This policy is causing enormous suffering to vulnerable people and does nothing to enhance public confidence in the system."
The study found some people had been destitute for more than five years, and many interviewees spoke of their "desperation" and the absolute "hopelessness" of their situation.
Refugee Action and Amnesty said financial support and accommodation should continue until asylum seekers' cases are resolved.
Temporary "leave to remain" should be granted so they work to support themselves, they added.
A Home Office spokesman said support and accommodation were provided for asylum seekers and failed asylum seekers when they are entitled to it.
He added: "Where people have failed to establish a claim to asylum, our view is that they should go home.
"We will bend over backwards to help people go home voluntarily but if that hand of support is pushed away, we will enforce return."