Westminster City Council has warned that new government rules on workers from Bulgaria and Romania could lead to an explosion of rough sleeping on London’s streets, impacting on popular gay areas such as Soho and the West End.

The council fears that new rules will not discourage thousands from arriving in the UK in the hope of securing a visa, and ending up destitute when they fail.

The new rules assume that potential migrants will consider the likelihood of getting a job before travelling to the UK after John Reid, Home Secretary, announced that unskilled labourers will be limited to 20,000.

Whilst no figures have ever been produced on the number of Eastern European migrants who speculatively arrive in the UK before arranging a job or accommodation, council officials believe the numbers may run into hundreds of thousands.

Prior to today’s announcement Westminster Councils rough sleeping unit estimated 300 Romanians and Bulgarians a year would have ended up sleeping rough in its borough alone. This is based on experiences from the previous influx after the last EU expansion in 2004.

However this assumed that everyone arriving in the country would be allowed to work – an assumption that has now been ruled out – meaning that the figure could be much higher.

At present the Council receives funding under the “Invest to Save” program, where destitute Eastern Europeans are offered either help to find work or free passage back to their families. This funding is due to run out at the end of the year, just days before the influx from Romania and Bulgaria is expected to start.

Westminster City Council is campaigning to maintain the funding, insisting that it is vital to the work of managing EU expansion. Migrants from new entrant countries are not entitled to any benefits in the UK and can therefore slide into extreme poverty very quickly, especially now many are not able to secure employment. Without intervention this poverty would force many into a life of homelessness and crime.

Westminster City Council, Leader, Sir Simon Milton, said: “Migration from Eastern Europe has been an overwhelmingly positive thing and we don’t want to do anything to suggest otherwise.

“The government hopes that the lack of visas will discourage people from coming to the UK, but in our experience this isn’t realistic. The fear is that thousands will arrive in the hope of gaining employment, only to end up jobless and on the streets. The rough sleeping services need the resources to deal with this problem.

“It is not an act of compassion to pretend this problem does not exist.”