Home Office plans to clamp down on illegal migration risk creating a “perma-backlog” of asylum seekers that could end up costing the taxpayer over £6bn a year, a think tank has said.

Researchers at the Institute for Public Policy Research (IPPR) argue that measures in the Illegal Migration Act – which aims to detain and remove people who arrive in the UK illegally – could see thousands of asylum seekers stuck in “limbo” and in need of accommodation.

A key plank of the Act is the Rwanda scheme, where those who arrive illegally will be deported to the east African nation in what the government hopes will act as a deterrent to those coming to the UK in small boats.

However, the policy is currently held up in the courts and no flight to Rwanda has yet taken off.

Now, the IPPR claims that – even if the Supreme Court deems the £120m deal lawful – deportations are likely to be on such a small scale that arrivals will still outpace the number of people who are removed.

With an inability to work or claim asylum legally, those left in limbo will be reliant on costly government support and housing, the think tank warned, while there is also the risk of an expanding undocumented population that is vulnerable to destitution.

It said that even if 500 people are removed per month, annual housing costs of those in limbo could exceed £5bn at current prices within five years.

If only 50 people are removed each month, then housing costs would increase to more than £6bn.

Marley Morris, IPPR’s associate director for migration, trade and communities, said: “There is only a very narrow window for government success on asylum, based on its current plan to forge ahead with the Rwanda deal and the Illegal Migration Act. Even with the Act fully implemented, under most plausible scenarios arrivals will still outpace removals.

“This will mean a growing population of people permanently in limbo, putting huge pressure on Home Office accommodation and support systems – plus a risk of thousands of people who vanish from the official system and are at risk of exploitation and destitution.

“Any incoming government would be likely to face a dire and increasingly costly challenge which it would need to address urgently from the outset – there will be no option to ignore or sideline the crisis it inherits.”

The IPPR analysis come after the government suffered a series of setbacks with regards to its plans to tackle illegal migration.

Rishi Sunak pledged to clear the legacy backlog by the end of 2023 and also made “stopping the boats” one of his five promises to the public ahead of the next election.

But earlier this month, Home Office figures showed that more than 100,000 people had now crossed the Channel in in small boats since records began five years ago.

Almost 18,000 migrants have arrived in the UK after crossing the English Channel so far this year.

In order to cope with the increasing number of arrivals, the government has sought to move asylum seekers out of hotels – which are costing the taxpayer £6m a day – and into alternative sites, including disused military bases and barges.

But the barge plan has not been without controversy after the asylum seekers moved onto the Bibby Stockholm in Dorset had to be removed after Legionella bacteria was discovered on the premises.

The asylum backlog also reached a record high of 172,758 at the end of March.

Shadow immigration minister Stephen Kinnock said: “This report confirms what Labour has been saying all along. The prime minister’s new law is a con which will not solve the chaos in the immigration system the Tories have created.

“Instead, it will make it worse, keeping more people locked in limbo waiting for years for asylum decisions and the taxpayer left footing an almighty bill.”

He said a Labour government would go after criminal gangs to tackle small boat crossings, negotiate a returns deal with the European Union and clear the asylum backlog.

A Home Office spokesperson said: “The Illegal Migration Act will help to clear the asylum backlog by allowing us to detain and swiftly remove those who arrive here illegally. While we operationalise the measures in the Act, we continue to remove those with no right to be here through existing powers.

“We are also on track to clear the ‘legacy’ backlog of asylum cases. It has been reduced by a nearly a third since the start of December and we have doubled the number of asylum decision makers in post over the past two years.”