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The verdict in the Court of Appeal followed the attempts of two London councils to force Glasgow to rehouse the families after their asylum applications were approved last year.

The National Asylum Support Service had dispersed the families to Glasgow, where they remained for more than six months. They were left homeless after being granted leave to remain in the UK, as NASS no longer had a duty to provide homes for them.

Both families made housing applications to London councils – the Al-Ameri family to Kensington & Chelsea, the Osmanis to Harrow – where they are believed to have connections.

At two hearings in the capital, both London councils argued that Glasgow should house the families because they had established a local connection there.

But the Court of Appeal ruled that, as the families had been dispersed to Glasgow on a "no-choice" basis, they could not establish a local connection by residence and the London councils had to house them.

Both councils are considering appealing to the House of Lords and were unable to comment.

A legal source said: "Councils in NASS dispersal areas are worried that if the ruling is overturned they will have to keep asylum seekers indefinitely because they will still have a responsibility to those granted asylum."

Homelessness charity Shelter welcomed the decision and said: "NASS accommodation is not accommodation of choice. People who need to move, having been recognised as a refugee, should be entitled to homelessness assistance in that area."

The ruling coincides with renewed calls from the Association of London Government for councils to be reimbursed for the cost of providing accommodation and subsistence to asylum seekers. It says the current grants system is inadequate because it is not based on actual costs.

The ALG's request comes in a week the Home Office has spent trying to overturn a High Court ruling that withholding support from asylum seekers who fail to claim asylum as soon as they arrive breaches their human rights.