Campaigners have won a High Court battle challenging the level of government financial support for "struggling asylum seekers".
A judge quashed the decision by Home Secretary Theresa May not to increase the level at which cash payments are made for essential living needs and ordered her to reconsider.
The ruling was victory for a number of organisations led by Refugee Action, which said there was a striking disparity between subsistence payments for asylum seekers compared with those given to people receiving income support.
Mr Justice Popplewell, sitting in London, said Parliament was told last June that the level of support for adult asylum-seekers and their children would be frozen for the financial year 2013/14.
The judge said it was a decision to set rates at a level which involved "a reduction in real terms from what was regarded in 2007 as the bare minimum level necessary to avoid destitution".
He ruled the decision legally flawed, adding: "In my judgment, the information used by the Secretary of State to set the rate of asylum support was simply insufficient to reach a rational decision to freeze rates."
He ordered the Home Secretary to reach a new decision by August 9 on the amounts to be paid under section 95 of the Immigration and Asylum Act 1999.
He said the amounts should be decided in accordance with the guidance given in his judgment.
The ruling was a victory for a number of organisations led by Refugee Action, including the Children's Society, Freedom from Torture, Still Human Still Here, and the Refugee Council.
They took action after research showed that many asylum-seekers are struggling to cope on the current rate of support.
The support is paid to individuals while they await a final decision on their asylum applications. During this period the immigration rules do not normally allow them to take jobs to support themselves.
Evidence of their alleged difficulties was provided for the legal challenge by asylum applicants who were later accepted as refugees or given other forms of permission to remain in the UK.
The Red Cross and Helen Bamber Foundation also provided evidence of the impact poverty was said to be having on them, with statements submitted from torture victims still suffering from trauma, parents with young children, and those living with a health condition.
The campaigners say that when the support system was introduced, the Government stated that the level of support to be provided under section 95 was to be set at 70% of income support levels for adults.
Until 2008, the rates were broadly increased in line with increases made to income support payments. Then the link was broken, and since April 2011 there had been no increase at all.
It was submitted that this had led to a striking disparity between the level of support provided to asylum-seekers compared with those given income support.
Later Refugee Action said it welcomed the judge's ruling that Mrs May's decision-making was "irrational" and she had "misunderstood information" when setting a "cripplingly low level of financial support" for asylum seekers.
A spokesman for the campaigning charity said that more than 23,000 people were affected and were being forced to live in poverty and isolation.
Single adult asylum seekers whose asylum claims have not been finally determined receive as little as £5.23 a day.
Research by the charity revealed that half of asylum seekers surveyed couldn't buy enough food to feed themselves or their families, and 43% of asylum seekers "miss a meal because they can't afford to eat while a shocking 88% don't have enough money to buy clothes".
The spokesman said the Home Secretary had acted irrationally by failing to take into account "the extent of the decrease in asylum support rates in real terms since 2007 and the freezing of rates in absolute terms since 2011".
Refugee Action chief executive Dave Garratt said: "Every day at Refugee Action we see the human impact of this unlawful Home Office policy which robs individuals and families of their dignity."
The decision to seek judicial review was taken "a fter five years of our evidence being ignored".
Mr Garratt said: "While we are hugely heartened by today's judgment, we urgently need to see the Home Office acting on this ground-breaking ruling by setting up a transparent and robust enquiry into the way asylum support rates are calculated."
Sonal Ghelani, solicitor at the Migrants' Law Project, said the Government had frozen asylum support rates "for the third, and now fourth, year running".
She said: "It is to be hoped that the Home Secretary will act urgently to review her decision and engage constructively with Refugee Action and its partners to reach a decision which is fair and respects the right to dignity of one of the most vulnerable groups in our society."
Freedom from Torture chief executive Keith Best welcomed today's ruling as "a wake-up call" that more needed to be done to assist asylum seekers said to be victims of torture.
The UK-based medical charity provides specialist psychological and physical treatment for torture survivors from all over the world
Mr Best said: "Decent financial support is vital to torture survivors being able to rebuild their lives in the UK.
"We hope this ruling will prompt a swift recalculation of the abysmal level of support provided to asylum-seekers in the UK which is often insufficient to allow them to eat properly - let alone use public transport, buy clothes and basic medicine.
"This is a wake-up call that we must do more to help those individuals who have already been through so much in escaping horror in their home country."
A Home Office spokesman said: "We are disappointed with the court's judgment. We are looking at all options, including appealing."
The Home Office pointed out that payment levels were reviewed periodically to ensure they were adequate to meet essential living needs.
A Home Office statement also said the judgment did not say payments to destitute asylum seekers were too low, but that there were errors in the way current levels had been set.
Increasing them could encourage spurious asylum claims which could clog up the system and make it harder for those with a genuine fear of persecution from receiving vital support.
A further look at payment levels was planned and would take into account the court's findings, as well as more up-to-date information.
The statement said fully furnished and equipped accommodation is provided to asylum seekers with no utility bills or council tax to pay.
Access to healthcare and schooling is free, and assistance is provided with transport where that is needed.
In addition, a weekly allowance - £36.62 for a single individual - is paid to meet remaining essential costs, like food, toiletries, and clothing.
The National Aids Trust (Nat) said it has seen asylum seekers with HIV unable to pay for adequate food, clothing and heating.
Deborah Jack, chief executive of Nat, said: "We congratulate Refugee Action on this important victory for human rights and common sense.
"At Nat we see numerous cases of people with HIV, here lawfully as they apply for asylum, being unable to pay for adequate food, clothing and heating because the support they receive is too low. This can have a devastating impact on their health."