The criticisms come in a leaked report called Faithful Cities, due to be published on May 22. The document accuses the government of trying to use deprivation as a way of deterring refugees from seeking asylum status.

It states: “It is unacceptable to use destitution as a tool of coercion when dealing with refused asylum seekers.”

The report has been written by the church’s Commission on Urban Life and Faith. It comes 21 years after Faith in the City, a critique of the social policy of Margaret Thatcher’s government which marked a sharp break between the Tories and the church.

In a preface to the report, Rowan Williams, Archbishop of Canterbury, says that while riches and opportunities have grown since Faith in the City, the two decades had also brought “fear, racial tension and the tendency to treat neighbours as strangers”.

Faithful Cities marks the end of cordial relations between the church and new Labour since it came to power in 1997.

It calls for asylum seekers to be allowed to sustain themselves and contribute to society through paid work.

At present, asylum seekers are not allowed to work for the first 12 months during the consideration of their application and those refused asylum are not entitled to any benefits.

The call may prove controversial. It comes after Mr Justice Sullivan last week accused three successive home secretaries of an “abuse of power” by failing to grant leave to remain to nine Afghans who hijacked a plane in Kabul in 2000 and forced it to land in Britain.

Sullivan ordered John Reid, the home secretary, to give the men discretionary leave to remain. Until then, the men had not been allowed to work in Britain.

Tony Blair called the judge’s decision “an abuse of common sense”. Last week, a statement on the Afghans’ behalf said they wanted to work and denied they were “spongers”. They said, “We understand the shock and even outrage against us,” but added, “it is this delay and the fact that we have been kept idle and living on state support . . . which is an affront to common sense.”

It has cost the taxpayer an estimated £15m to keep the men in Britain.

The new report was written in part by John Sentamu, the Archbishop of York. It will tell the government that it “must lead rather than follow public opinion on immigration, refugees and asylum policy”.

The report will make it clear Britain has an international, moral and legal responsibility to welcome those fleeing adversity from other parts of the world and to provide social security.

This Friday, three days ahead of the report, Rowan Williams is planning to lead a debate in the House of Lords to focus attention on the life of the church in towns and cities.

Williams hopes the report will make the same kind of impact as Faith in the City.

The report will also call on the government to implement a “living wage” rather than a minimum wage.

One source, who helped draft the report, said: “Although the minimum was a promising development, the level at which it is set is not a living wage.”

The report will say that the minimum wage, introduced by Labour in 1999 and currently worth £5.05 per hour for those aged 22 and over, does not meet basic needs.

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