Failed asylum seekers living on subsistence vouchers are selling them for half their worth to raise money for bus fares to collect them.
Failed asylum seekers must survive on £35 a week in subsistence vouchers
Over 5,000 people in the UK receive the £35-a-week government hand-outs.
The "Section 4" claimants have been refused asylum by the Immigration and Nationality Directorate but it is too dangerous for them to be returned home.
Vouchers were scrapped for all other categories of asylum seekers in 2001 and replaced by cash payments.
The then Home Secretary David Blunkett acknowledged problems with people being unable to exchange the tickets for everyday living requirements such as toiletries, laundry or public transport.
The voucher system, introduced in 1999, had also begun to be exploited by criminals on the black market.
Its general use was abolished at the end of 2001 - but it was kept on for "Section 4" claimants.
At the time, there were only a few dozen people who fell into this category, partly because the eligibility criteria was narrower than today and partly because failed asylum seekers were not informed they could apply for it.
The government was aiming to house all those awaiting detention in full board accommodation.
But there is not enough of this to house people since the Home Office ruled in January that there is currently no safe route of return to Iraq.
It followed a challenge in the High Court by an Iraqi who had been refused Section 4 support.
The National Asylum Support Service (NASS) says there are about 250 applications for Section 4 support each week and about half of these are from Iraqis.
The File On 4 programme spoke to Kurds housed in accommodation in Oldham, Greater Manchester after they were denied asylum from Northern Iraq.
Living 10 miles from Manchester city centre, they cannot use their vouchers for the fortnightly bus journey to pick them up or the 20-mile round trip to report to the Home Office each month.
Their weekly £35 can only be used in some supermarkets or in expensive city centre coffee shops.
One man called Korshid said: "I sold vouchers worth £70 - supposed to last two weeks - for £35 in cash so I could buy halal meat in the market.
"It's enough to last me about three days. I haven't got a washing machine at home and I can't take my clothes to the laundrette because they need money.
"Sometimes when I'm walking through Oldham town centre I'd like to buy chips and beans which is just about 50p but I feel sad because I can't even buy that."
Another man, Mala, whose legs were both injured in an explosion in Iraq, said the Home Office requested a doctor's report which would cost him £44.
Such asylum seekers have been flocking to Citizen's Advice bureaux across the country for help.
The CAB's national officer on asylum, Richard Dunstan, said those on Section 4 support should be awarded some kind of status allowing them the temporary right to remain in Britain and seek work.
He blamed a lack of clarity within the Home Office for the swelling numbers of Iraqis, Ethiopians, Eritreans, Iranians and others - such as those too sick to travel - who were stuck in legal limbo.
"It's the very same department which makes both decisions - to refuse asylum seeker status but not to return someone for safety reasons - and one would have expected some discussions within that department to consider the implications of a decision not to send a person back to Iraq."
CAB says it has voiced these concerns to the Home Office - but the government insists it will not make any arrangements which would seem to give refused asylum seekers a further chance to remain lawfully in Britain.
Minister Tony McNulty conceded that the voucher system did need looking at but told File On 4: "We provide the accommodation, we provide other support mechanisms for Section 4 people. They are supposed to be in a temporary situation rather than otherwise."
File On 4: BBC Radio 4, Tuesday 21 June, 2005 at 2000 BST, and repeated on Sunday 26 June, 2005 at 1700 BST.