Asylum seekers were housed in two blocks of flats in Everton

The asylum seekers were told by Landmark to leave the flats in Everton in June 2002 but many refused to go, saying the alternative accommodation was of poor quality.

The move drew criticism from support groups and politicians, including Liverpool Riverside MP Louise Ellman.

An independent inquiry has ruled that the company, Landmark, did not breach its contract.

But Home Office Minister Beverley Hughes said what happened in Liverpool was "completely unacceptable" and warned the firm would have to improve its treatment of asylum seekers.

She said: "The contract with Landmark will be monitored over the next six months to make sure it is being complied with and I will receive a further report at the end of that period.

"Landmark will be held closely to account."

Some asylum seekers refused to leave the flats

She added that it would be made clear that "significant improvements" were required from Landmark in its performance and the standard of its properties".

"In the meantime, no further dispersal will be made to Landmark properties," she said.

Landmark has a contract with the National Asylum Support Service (NASS) to house asylum seekers in the city.

Several complaints were received by NASS about the conditions in the tower blocks and allegations of racial intimidation against asylum seekers.

But an independent inquiry found no evidence of this.

It criticised NASS and Landmark for not paying "sufficient attention to the needs or rights of individual asylum seekers".

It said the suitability of the alternative accommodation was not checked in advance and the asylum seekers should not have been moved over the Queen's Jubilee weekend.