Epping Forest District Council applied for an injunction against the owners, Somani Hotels.
Asylum seekers can continue to be housed in the Bell Hotel in Essex after Epping Forest District Council failed to secure a High Court injunction that would block them from living there.
The council took legal action against the hotel owner, Somani Hotels, claiming that accommodating asylum seekers there breaches planning rules.
Lawyers for Epping Forest District Council (EFDC) said the housing of asylum seekers is a “material change of use” and has caused “increasingly regular protests”.
The Home Office intervened in the case, telling the court the council’s bid was “misconceived”.
Mr Justice Mould dismissed the claim on Tuesday and said in a judgment that it is “not a case in which it is just and convenient for this court to grant an injunction”.
EFDC were granted a temporary injunction earlier this year following protests outside the hotel, which would have stopped 138 asylum seekers being housed there beyond September 12.
But this was overturned by the Court of Appeal in August, which found the decision to be “seriously flawed in principle”.
EFDC then sought a permanent injunction through a three-day hearing last month.
