New figures revealed Middlesbrough has topped England's asylum seeker league with the town becoming the first in the country to breach Government accommodation guidelines.
The amount of cheap housing in the Teesside town means it has become a magnet for penniless arrivals seeking sanctuary in the UK.
The Government insists no local authority area should need to house more than one asylum seeker per 200 of population.
But a Middlesbrough Council report has revealed almost 1,000 asylum seekers are currently being housed in the town, which has a population estimated at 138,400 - putting it almost one-and-a-half times the Government limit.
Asylum seekers are generally housed at taxpayers' expense homes while the Home Office decides whether to grant them asylum.
The schools and nurseries are full because of all the foreign kids who have come into the area
Stephanie Mullins
The process can take up to a year and a total of 982 asylum seekers are currently housed in paid-for accommodation in Middlesbrough.
In the report to be discussed by the Labour-run authority next week, Richard Horniman, economic development manager at Middlesbrough Council says the town has seen a rise in the number of asylum seekers through Government-funded regional contracts.
He said it was down to "lower value housing" offered in parts of the borough - which make it cheaper to house people.
The report highlights Gresham and Stockton districts as receiving the largest influx.
Yesterday locals told of the dramatic strain this has put on local services.
Stephanie Mullins, 37, said she was struggling to find a nursery place for her son Brodie King, two.
She said: "The schools and nurseries are full because of all the foreign kids who have come into the area. I have been applying for ages to get Brodie in somewhere around here and there just aren't any places.
"There needs to be some kind of control put in place in the town because local people are starting to feel part of a minority. In the past year it has been very noticeable that number of Poles, Kurds and Romanians have shot up."
Her mother Lynn, 60, said: "The area has changed completely over the years, the sense of community has gone.
"It feels as though people are just passing through and whenever houses become available they are snapped up to house asylum seekers rather than given to local people."
Graham Watts, 54, a retired bus driver, said: "I've had a pacemaker fitted and went through a triple heart bypass but I can't get an appointment with my doctor.
"I have to call and ask for an appointment and then they ring me back and assess whether or not I deserve one based on my symptoms. It's all down to the number of foreign people who have poured into the area.
"The schools and doctors can hardly cope. If I am lucky enough to get an appointment the waiting room is invariably packed with people of every nationality except British.
"I've lived here 25 years and it used to be a nice neighbourhood with lots of elderly people. But as they died off their houses were bought up by private landlords who want to fill them with foreigners."
Standing outside Polski Sklep convenience store Julie-Anne Ward, 44, said: "You just have to look around to see the effect it's had on the area, I feel like a foreigner in my own country.
"You walk along this road and see all the old stores being replaced by Polish shops and shops run by Kurds and every nation under the sun except ours."
Charmaine Kearns, 27, added: "It's like living in a foreign country, you hardly hear anyone speaking English and there's no chance of finding a house to rent unless you're an asylum seeker.
"My partner and brother would do anything to find work but it's now even harder to get a job because of all the foreign people who are now looking for jobs as well, they're happy to take less than the minimum wage and there are plenty people who will employ them on the cheap."
But Justice First, a Stockton-based charity that supports refugees and asylum seekers and helps them to build new lives in the UK, said current conditions for asylum seekers were tough,
The charity's manager, Dr Pete Widlinski said it was vital that communities like Middlesbrough did not "turn their backs on extremely vulnerable people."
He said: "I do understand people in Middlesbrough have concerns about immigration but these are people who are literally fleeing for their lives and as a civil society and a community we need to be able to offer them refuge."
The report, due to be discussed at a meeting next Monday, recommends the setting up of a regional "strategic migration partnership".
It also said information about economic migrants is "harder to track" as there is no central register and the impact of such migrants is "largely unknown".
The partnership would be led by Middlesbrough Council and funded by the Home Office to manage issues surrounding migration as well as carry out research the economic and social impact.
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