Many hostel residents are on home detention curfews and are tagged
The Ministry of Justice is investigating claims that a private company is opening 150 new bail hostels across the UK without consultation.
Local residents fear they may be at risk from some of those living in them but the government says only those deemed safe by a judge are allowed to live in them.
Two hostels run by Clearspring opened in Durham last year, sparking an immediate campaign to shut them down.
The city council says it was not consulted before the company started renting the ex-local authority properties, which are on the same road as a secondary school.
While the councillors heading the campaign say they are told the offenders are not "high risk," they still have concerns.
Dennis Southwell, who represents the ward containing the hostels, says he is inundated with complaints about the behaviour at the properties.
"Only last weekend there was a party in one of them which went on until 6am. It causes nothing but grief for the residents," he said.
"It's a three-bedroom house in the middle of a housing estate. There's a senior citizen living on one side, and a woman with a child on the other.
"They shouldn't be there. The policy is wrong. They should either be in prison or at home with loved ones if they don't have convictions."
Noise created by the residents and the visitors they attract are the main problems, Mr Southwell added.
He said: "One of the main problems, especially with the male hostel, is that it attracts a lot of young girls. These places attract a lot of young people around their doors."
Durham City Council deputy leader Carol Woods is leading the campaign to shut the hostels.
She said: "The community was upset when these appeared down their street. It's not something anyone would want.
"They are close to a secondary school which is unacceptable. The main problem is the anti-social behaviour which goes with having bail hostels."
Reports in the national media of serious crimes committed by people on bail fuels fears about the hostels, she added.
"Although they say the people there have only committed low level crimes, you only need one person to do something. One murder is one too many."
Clearspring has not commented on the claims it has opened hostels without consultation.
A Ministry of Justice spokesman explained people placed in these properties had only been charged with crimes and were innocent until proven guilty.
Hostels offer an address from which people can access the police and other services without putting additional pressure on the prison system, he said.
A judge decides whether they are safe to live in the community, he said.
"Defendants who pose a risk to the public will continue to be held on remand," he added.