Epping Forest District Council (EFDC) has lost its latest bid to stop housing asylum seekers at the Bell Hotel in Epping.
The council wanted to appeal a High Court ruling in November that asylum seekers can continue to be housed at the Essex hotel.
But on Friday, two Court of Appeal judges said the appeal could not go ahead.
Lady Justice Andrews and Lord Justice Holgate said the High Court judge did not "duck the issue" related to planning law and that EFDC's appeal was "unarguable".
They said: "The need to provide accommodation for persons present in this country, whether as asylum seekers or otherwise, is plainly capable of being a relevant planning consideration."
EFDC had wanted to secure an injunction that would block them from living there.
It took legal action against Somani Hotels, the hotel owner, claiming that accommodating asylum seekers there breaches planning rules.
Councillor Chris Whitbread, EFDC leader, said in a later statement that the council was "angry and hugely disappointed by this outcome".
"I want to reassure residents that our priority remains with them and the protection of our communities across the district", he added, before repeating that Somani and the Home Office had carried out "inappropriate use" of the Bell Hotel for asylum accommodation.
Mr Whitbread noted that the decision "represents the end of the court process for challenging the use of the Bell Hotel as asylum accommodation" - meaning the council cannot challenge it further.
Lawyers for EFDC previously said the housing of asylum seekers is a "material change of use" and has caused "increasingly regular protests".
The Home Office intervened in the case, telling the court the council's bid was "misconceived".
But Justice Mould dismissed the council's claim, saying: "I have not been persuaded that an injunction is a commensurate response to that postulated breach of planning control."
He added that there was a "continuing need" for hotels to supply "contingency accommodation" to asylum seekers, and that this statutory responsibility was a "significant counterbalancing factor".
This comes after Hadush Gerberslasie Kebatu, an Ethiopian national who was charged with sexually assaulting a girl in Epping while housed at the hotel, was deported.
Kebatu, who had arrived in the UK only days earlier before the assault, was jailed for 12 months in September, mistakenly released from prison, and re-arrested, before being given £500 to leave the country.
The hotel became a hotspot for protests last summer after the assault.
(c) Sky News 2026: Epping council loses latest bid to stop housing asylum seekers at hotel
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