Last week another hefty bale of straw was dumped on the shoulders of housing providers trying to grapple with the government's asylum policy. The Lords decided that asylum seekers who have been allowed to remain in Britain can pursue publicly funded housing in a locality of their choice (pages 9 and 10). Quite right too: denial of the choice of where to live is anathema to any free society.

The decision, though, will inevitably lead to more problems for councils in the capital. They predict that refugees who have previously had no choice will start making their way back to London. It comes at a time when many of these same councils are waiting to find out how many of the 15,000 asylum-seeking families granted amnesty by the home secretary at the end of 2003 will need accommodation in their boroughs.

And all this as they race against the clock to meet the target for getting families out of bed-and-breakfast accommodation by April.

Meanwhile, in parts of the North, councils that have geared up for larger numbers of people to be dispersed may now have surplus accommodation for asylum seekers on their hands. Elsewhere, charities are left to cope with the impact of section 55 of the Asylum Act, which denies help to those who do not register within three days of arriving in the country. A report from the Greater London Authority this week says the policy is already causing hardship to thousands of people.

Councils are predicting that refugees who have previously had no choice will start making their way back to London

One might argue that, whatever the government's asylum policy, it will never be exactly right for housing providers. It would greatly help, though, if they could be sure that the system is as fair and practicable as possible. The government should be prepared to listen to the charities' view on section 55 and act if necessary.

It should speed up the processing of those being granted amnesty to reduce potential chaos in council housing departments – or at least negotiate extensions on their bed-and-breakfast target deadlines. It should also look favourably on proposals by the consortium of councils in the North-east that want to be able to house those who have been granted permission to stay in the country for 60 days rather than the 28 days now imposed by the National Asylum Support Service before they have to find their own accommodation.