An "invisible" population of destitute asylum seekers who cannot go home or contribute to British society needs to be tackled, the Government has been told.
A report by the Joseph Rowntree Charitable Trust claimed that many of those refused asylum were living in "appalling and inhumane" conditions.
They found themselves in a "tattered safety net" and were left homeless, hungry and hidden, said the report.
Research among a group of over 100 failed asylum seekers in Leeds found that one in four had slept rough and a third had been destitute for at least a year.
Many were suffering huge social and health problems and some were even considering suicide, the study found.
The Government was pressed to make it easier for asylum seekers to work and to provide basic food, shelter and care.
Kate Adie, who chaired the trust's inquiry, said: "The current UK asylum system fails by the standards both of human decency and of those who want to 'get tough' on asylum.
"For the benefit of everyone, there has got to be urgent and pragmatic reform which brings these people in from the shadows so that they can be treated humanely, contribute to the community and remain inside the system. We are proposing practical, workable solutions which will benefit local communities as well as government."
Home Office Minister Joan Ryan said: "Our asylum system is a fair one. It ensures that support is available to someone claiming asylum from the time they arrive in the UK until the outcome of their claim is determined.
"But it is not right to ask the UK taxpayer to fund - potentially indefinitely - those who choose to remain when it is open to them to return to a home country that has been found safe for them to live in."
