A single mother and her three children were left homeless after Haringey Council botched a calculation of her housing benefit.
An official report says the family – which includes a disabled child – were forced to move out of their home after the council wrongly told her she owed more than £8,000 in overpaid benefits.
The report by the Local Government Ombudsman also finds the council mishandled her homelessness application, meaning the family had to stay in unsuitable accommodation.
Haringey Council has apologised for the mistakes and says it has paid the family, which has not been identified, more than £5,500 in compensation.
The Ombudsman found the council failed to send her case to an appeals tribunal, which would have spotted its mistakes.
A Haringey Council spokesperson said: “We’re sorry for the mistakes we made in this specific case and have taken steps to fix them.
“The wellbeing of residents is a priority for Haringey Council as it is for all local authorities and we’re determined to learn lessons from this to ensure similar situations are not repeated in the future.”