Government figures released on 6 December show the number of homeless families with children living in bed and breakfast accomodation has risen by 51 per cent in the past year.
More than 2,000 homeless families are living in B&Bs, often in single rooms with no cooking facilities and shared bathrooms. Many will spend Christmas Day there.
The number of families living in B&Bs for longer than six weeks, which is the legal limit, has almost tripled in the past year.
The figures also reveal show the number of homeless families with children to have risen by 12 per cent to 8,820.
The problem is particularly acute in London where more than a third of councils have housed families in B&Bs for over six weeks. Figures obtained by the BBC from 27 of the capital's 32 boroughs show that more than half are sending people outside London because of a shortage of homes.
Ken Jones, Director of Housing Strategy at Barking and Dagenham Council, said it was the "most challenging" set of circumstances he had seen in 34 years.
He said an inadequate supply of affordable housing and the financial crash had caused "the perfect storm" in London.
The housing and homelessness charity Shelter is calling for support to prevent families losing their homes in the first place.
Campbell Robb, Chief Executive of Shelter, said: "This huge increase in families living in B&Bs is worrying. It’s hard to imagine losing your home, let alone the horror of squeezing your family into one room without decent facilities.
"Families sometimes live like this for months and it’s the children who suffer the most. We urgently need more support this Christmas to help families stay in their homes."
Housing Minister Mark Prisk has invited 18 London councils with high rates of homelessness to discuss the challenges faced and what the government might offer.
He said the government had "strengthened the safety net for families", was expanding the private sector and building 170,000 more affordable homes.