The homes were advertised on the council intranet in July 2007
A council officer dismissed for letting staff move into low-rent homes in Norwich and taking one herself has lost an appeal to get her job back.
Norwich City Council said Kristine Reeves, former head of neighbourhood and strategic housing services, had been guilty of gross misconduct.
A disciplinary panel rejected her appeal unanimously, the council said.
The panel was independently chaired by a leading figure in employment law and also comprised two councillors.
An investigation was carried out into why staff, including Ms Reeves and her boyfriend, were able to rent homes intended for elderly people.
Residents were moved out after being told the Greyhound Opening complex in Norwich was to be demolished.
The homes were then advertised on an internal Norwich City Council website and staff allowed to move in.
Allegations of misconduct
Ms Reeves also took one of the properties and when this was discovered an investigation was carried out that resulted in her dismissal.
This step was based on three allegations that the council said represented gross misconduct.
The allegations were that Ms Reeves:
• in July 2007, was responsible for adopting a lettings process for the decommissioned sheltered housing at Greyhound Opening that did not comply with, and was contrary to, council policy
• failed to ensure that her service had adopted a proper procedure with appropriate safeguards for the letting of decommissioned sheltered housing to staff
• in September 2008, as the head of service responsible for the management of the decommissioning of the sheltered housing units, she moved into Greyhound Opening and took a joint tenancy with her partner, who was also her work colleague.
The council said Ms Reeves "failed to see this as a conflict of interest or seek approval for this action".
The council concluded: "As a consequence of these actions she has brought the council into severe disrepute."