New reports show Rishi Sunak wanted to keep migrants in hotels rather than set up large scale asylum centres.
Leaked documents from 2022 show officials complaining Sunak, while Chancellor, was "refusing to fund" asylum centres - similar to the ones in Greece - and insisted "hotels are cheaper".
It comes as the Prime Minister is facing up to right-wing rebels in his party who are plotting to adjust his controversial Rwanda bill.
There are concerns from the right of the party that the bill in its current forms will not stop the boats.
Sunak has branded migrant hotels a “farce”
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Downing Street said it will hold crunch talks with rebels before votes next week.
The Sun reports that aides implored then PM Boris Johnson to overrule Sunak and demand he provide money for large-scale accommodation.
A Downing Street dossier reeled off several proposals aiming at reducing illegal immigration Sunak was allegedly seeking to frustrate.
One section said: "CX [Chancellor] is refusing to fund any non-detained accommodation (e.g. Greek-style reception centres) because hotels are cheaper."
The Comfort Inn hotel on Belgrave Road in Pimlico, central London, where the Home Office reportedly asked a group of refugees to be accommodated four to a room back in June
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The memo implored Johnson to hit back that "depending on hotels a long-term solution is politically untenable and completely inappropriate for the British state."
Officials argued that "viewing this purely through a value for money lens is disingenuous" and that voters "rightly consider it completely unacceptable".
In response, Downing Street sources insisted that Sunak was merely concerned about value for money and the document was an unfair representation of his views.
Sunak has branded migrant hotels a “farce” and has begun the process of winding them down.
Boris Johnson was implored by aides to overrule Sunak
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Around 50 have been closed since the autumn and a further 50 are earmarked to shut by the spring.
In October, the Government announced plans to cut the number of hotels used to accommodate asylum seekers.
The Government has pledged to house asylum seekers in cheaper accommodation, including RAF bases at Wethersfield in Essex and Scampton in Lincolnshire.
About £2.3billion was spent on hotel accommodation between April 2022 and March 2023.