Migrant hotels are costing the UK taxpayer around £8 million per day, the annual report from the Home Office revealed.
The report - published this morning - said the current migrant crisis is putting "unsustainable pressure" on the UK's asylum system.
The asylum system as a whole, including accommodation costs, is costing the taxpayer over £3 billion a year.
The report said that plans to use military sites and barges to house asylum seekers will help "address" the skyrocketing costs of migrant accommodation.
It said the alternate forms of accommodation will be scaled up over the coming months.
In a statement at the start of the report, Home Secretary Suella Braverman said: "We must stop the boats. Illegal immigration is unfair on taxpayers and would-be immigrants who play by the rules, has an unbearable impact on public services and local communities, enriches the gangs, and is lethally dangerous."
She praised the Government's Illegal Migration Act, enacted into law earlier this year, describing it as a "vital step in securing our borders".
Braverman added: "It places a cap on the number of people seeking protection that the UK will resettle via safe and legal routes, radically narrows the challenges and appeals that can suspend removal and tightens modern slavery laws."
She also said the Rwanda deal is a "crucial" part of the Government's mission to "stop the boats".
The report said: "We need to stop the boats to relieve the unsustainable pressure on our asylum system and accommodation services, which is costing over £3 billion a year.
"The Illegal Migration Act will ensure anyone arriving illegally can be detained and swiftly removed, so that people know they cannot skip the queue by coming here illegally.
"This goes further than ever before to do what is necessary to fix the issue, but legislative changes take time and there is no single silver bullet.
"In the meantime, we must take action to address the unacceptable costs of housing migrants in hotels which is costing the taxpayer around £8 million a day."
It added: "The Minister for Immigration has set out the measures we are taking to correct the injustice of the current situation.
"We have announced the first tranche of sites which we will set up to provide basic accommodation at scale. The Government will use military sites being disposed of in Essex and Lincolnshire.
"These will be scaled up over the coming months and will collectively provide accommodation to several thousand asylum seekers.
"We have also agreed on the use of a barge to accommodate migrants at Portland Port – similar projects have been successful in Scotland and the Netherlands."
Labour’s shadow Home Secretary Yvette Cooper said the £8 million daily bill for asylum seeker hotels was “astronomical”.
She said in a statement: “This report illustrates the staggering costs of the Tories’ asylum chaos, with the taxpayer now spending an astronomical £8 million a day on hotels and the costs still going up and up.
“That is the price of the Conservatives’ utter failure to get a grip on this issue — now costing over £3 billion a year.
“Shockingly, the cost of hotel accommodation has gone up by a third since Rishi Sunak promised to end hotel use.
“The Tories have busted the Home Office budget, they’ve broken the asylum system, and the British people are paying the price.
“Only Labour has a serious plan to end hotel use, saving the taxpayer billions of pounds, as well as smashing the criminal gang networks to strengthen our border security and stop dangerous boat crossings.”