The move was caused by a sudden influx of new arrivals which led to overcrowding at a nearby hostel.
Security firm G4S, which has a contract with the Home Office to manage the asylum seekers, was forced to book 405 rooms on a half-board basis at two hotels, including the four-star Holiday Inn, where guests have free use of a health club and spa.
The revelation caused outrage last night, with one Labour MP vowing to raise the issue in the Commons.
The local council and police have also protested to G4S, which is supposed to notify them when temporary accommodation is used.
The firm booked 356 beds at the Ramada Encore in Barnsley, South Yorkshire, and 49 at the town’s Holiday Inn between mid-March and late April.
The firm booked 356 beds at the Ramada Encore in Barnsley, South Yorkshire, and 49 at the town’s Holiday Inn between mid-March and late April.
The Holiday Inn offers bed, breakfast and an evening meal at prices of up to £100 a night. The Ramada has a restaurant, wi-fi and a wake-up service and every room boasts a flat-screen TV.
Rooms with breakfast are priced at around £49 a night, giving an estimated cost to the public purse for the six-week stay of £900,000.
G4S, alongside two other firms, has a £620million contract to provide accommodation for asylum seekers until their applications are decided. Under the contract, they must use their public funding to meet all costs.
Dan Jarvis, Labour MP for Barnsley Central, said: “This raises serious concerns about the conduct of the Home Office and G4S.
“I will be raising urgent questions in Parliament about why Barnsley council was apparently not informed that asylum seekers were being accommodated in hotels locally and why the correct procedures have not been followed.
"I will also be seeking urgent assurances that mechanisms have been put in place to prevent this situation from happening again.
“I will also raise the question of how much money has been spent on accommodating asylum seekers in hotels.
"I do not believe my constituents will think this is an effective way of spending taxpayers’ money.”
Asylum seekers would normally stay in the Angel Lodge in Wakefield, West Yorkshire, which has 250 beds, but the two Barnsley hotels offer more luxurious accommodation.
Andy Silvester, of the TaxPayers’ Alliance, said: “This is still taxpayers’ money, albeit indirectly, so G4S must be held accountable.
“Transparency and prudence must be the top concern whenever a penny of the public’s money is spent, so G4S must be honest about whether this is common practice."
David Simister, a Ukip county councillor and prospective MP, said: “What a message this sends.
"While millions of Britons are living on and below the bread line, asylum seekers are living a life of four-star luxury courtesy of the taxpayer.”
Barnsley council and South Yorkshire Police have sent a “strongly worded” letter of complaint to G4S and all three will meet next week.
A council spokesman said: “We have expressed our concerns to the Home Office and UK Border Agency.”
The Home Office said they were aware G4S had used a hotel in the Barnsley area for temporary accommodation “for a short period of time”.
G4S described the matter as an “exceptional case involving a sudden spike in asylum seekers who needed temporary accommodation”.
It said there would be no additional bill for the Home Office.
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