More than 200 asylum seekers were moved into a hotel without any consultation with council leaders, the authority claims.
Council leader Ian Ward said he may refuse to accept resettled asylum seekers in future.
Some 238 people were moved into the hotel, which is not being named.
One of the guests, a man in his 20s originally from Sudan, told the LDRS on Friday he had been living at the hotel for some months.
The LDRS has contacted the Home Office for a comment.
‘Left in the dark’
In a letter to the Home Office, Mr Ward warned that the decision, combined with the lack of extra funding, could fuel community tension.
“The existing total of service users in initial accommodation in Birmingham is 593 individuals, far higher than any single other local authority and in fact a higher number than any single other region in the country,” Mr Ward wrote to junior minister Chris Philp.
“All this activity has been totally unfunded by central government and this remains the case in this time of national crisis.”
The letter, which was not publically available at the time of writing on 22 May and has only recently been made available to the press, went on to warn of “significant” community tensions once rough sleepers reconvene in the immediate area.
The UK has a legal responsibility to settle anyone claiming political asylum while their cases are assessed.
It is understood the council was informed of plans to relocate 238 asylum seekers into the city on 21 May – less than a week before the first were due to be placed there on 27 May.
Shabana Mahmood, MP for Ladywood, said: “Councils have been left in the dark as to what is happening in their local areas.
“This lets everyone down – both the asylum seekers themselves and local residents.”
Staff and volunteers at St Chad’s Sanctuary provided language support to those at the hotel and have helped them with basic essentials and coronavirus protection.
Abigail Martin, from the charity, said: “The people we are talking about have fled to the UK for sanctuary because their lives are in danger.
“They don’t have a choice about where they are sent or where they are housed.”