A legal battle is brewing between London boroughs and neighbouring towns over the rehousing of homeless people.
At least 20 London boroughs have moved families to places such as Luton, Basildon, Thurrock and Milton Keynes.
Luton housing chiefs say it is putting a huge additional strain on the town's resources.
But Waltham Forest Borough Council, which has placed 57 families in Luton, says budget cuts and an affordable housing shortage forces its hand.
Tom Shaw, Labour-run Luton Borough Council's housing portfolio holder, said the council had made a complaint to Waltham Forest about its placements in Luton.
"Look, we're not happy with this," he said. "That negotiation is going on at the moment at top director level and if that doesn't work we will contemplate legal action."
He said Luton has had to spend "thousands of pounds" on providing transport for the children of families arriving from the capital who then find the nearest school is already oversubscribed.
Waltham Forest said the shortage of suitable accommodation and increasing numbers of people coming to them in crisis meant it had few options other than out of borough placements.
Its cabinet member for housing, Khevyn Limbajee, said: "Rocketing prices in the private rented sector, government cuts to benefit caps and other changes to welfare and a lack of housing availability has resulted in our residents being priced out of the market and the number of homeless households in our borough rising rapidly.
"The number of households in temporary accommodation currently stands at over 2,000.
"We spoke to Luton Borough Council ahead of families being offered temporary accommodation there and subsequently notified the council of each individual placement, once confirmed".
Luton already has more than 10,000 on its housing waiting list and has had to put more than a 100 families into bed and breakfast accommodation.
A significant number of homeless families from Waltham Forest have been housed in a refurbished former office block called Cardiff House, which is about to be sold to a hedge fund as an "income generating asset".
Among those living there is Nicola Chapman and her four children, who arrived in Luton in June.
She said: "I got evicted from my home in Leyton and the council decided it would be best for me to come here for some unknown reason.
"I'm not happy at the moment, it is giving me really bad anxiety. Also, I am having to take one of my children to school every morning and it is a 40 minute walk away.
"I have no friends or family around here. I hope I get moved very quickly. The flat is tiny, it is more like a studio flat. It is very distressing for all of us."
At Cardiff House, the BBC spoke to one nine year old boy and his parents. He is yet to be found a place at school.
"I really miss my friends. I used to be able to walk to school. They are saying the nearest one, if it can take me, is five miles away. Or I will have to go to school in London."
Meanwhile Thurrock Council has taken more homeless families than any other area outside London.
At least 266 families are currently in the area, up from just 29 three years ago.
London boroughs are buying properties locally or paying Thurrock landlords to house their residents as tenants.
John Kent, leader of the council, said: "There is nothing we can do about either of these. But the first has the effect of reducing the number of homes available for local people to buy or rent and the second forces the cost of all local private rents through the roof."