Ministers are intentionally making vulnerable asylum-seekers destitute, a committee of MPs and peers has said.
The Joint Committee on Human Rights called the support system a "confusing mess" which has also failed children.
A policy of refusing benefits to some asylum-seekers, combined with a ban on legal working, made "destitution" seem "deliberate", it said.
There was "hard evidence of appalling treatment", it added. The Home Office said it would consider the findings.
The JCHR highlighted one case of a destitute Rwandan asylum-seeker who suffered bowel cancer and had a colostomy bag, but was refused treatment by a hospital and could not register with a doctor.
Meanwhile, a woman had been forced to live rough for three months - sitting at crowded bus stops all night because she was terrified of being alone - but on winning her asylum appeal had been ruled entitled to immediate support.
The committee also reported how the parents of a three-week-old baby had been housed in a "filthy, bug-infested room" in Leicester.
The committee's chairman, Labour MP Andrew Dismore, said: "The system of asylum-seeker support is a confusing mess, and the policy of enforced destitution must cease.
"Asylum-seekers as a group do not always get the greatest sympathy from society or the media, but what we have seen and heard provides very hard evidence of appalling treatment that no human being should suffer."
The report said: "Many witnesses have told us that they are convinced that destitution is a deliberate tool in the operation of immigration policy.
"We have been persuaded by the evidence that the government has indeed been practising a deliberate policy of destitution of this highly vulnerable group.
"We believe that the deliberate use of inhumane treatment is unacceptable."
The denial of health care for asylum-seekers and their children often amounted to a breach of human rights laws, it added.
The committee raised concerns about the treatment of children by the asylum system, especially when they are held in detention.
It called for an end to detention for families with under-18s after seven days.
In 2005, 1,860 children were locked up under immigration powers.
Earlier this week, a report by the Joseph Rowntree Charitable Trust said many of those refused asylum were living in "appalling and inhumane" conditions.
They found themselves in a "tattered safety net" and were left homeless, hungry and hidden, it added.
The Home Office said it would consider the recommendations.
But in a statement it said: "We simply do not think that it is right that those without any right to be in the UK should be given the right to work or access other services."