Plans for a giant cruise ship to house asylum seekers near Liverpool have been scrapped after being declined by port officials.

A government source has told Sky News the vessel was due to house 500 men seeking asylum in Birkenhead, but that will no longer happen following objections from Peel Ports.

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The ship would have been a new, seventh site acquired by the Home Office under controversial plans to start transferring migrants from hotels in a bid to crack down on illegal immigration.

The rejection comes after it emerged permission to berth a barge housing asylum seekers at an east London docks was also refused.

London’s Royal Docks said it had informed the Home Office last month that water beside City Airport would not be appropriate as a potential location to moor one of its floating accommodation vessels.

Scott Derben, managing director of London’s Royal Docks, said on Thursday: “London’s Royal Docks were approached by the Home Office to look at the feasibility of berthing a cruise ship to house asylum seekers.

“After investigation, it was concluded that this would not be an appropriate use for the Royal Docks.

“The Home Office were informed of this decision in May.”

The use of barges, as well as former military barracks, is part of government efforts to deter migrants from embarking on dangerous Channel crossings in small boats and to reduce the £6 million daily spend on hotels.

Charities and opposition MPs have blasted the plans and called on the government to focus on reducing the asylum seeker backlog.

Tory MPs have also voiced opposition to the sites being operated in their areas.

Richard Drax, the Conservative MP for South Dorset, said the vessel due to dock in his constituency in the coming weeks will be “nothing more than a quasi-prison”.

As well as the Bibby Stockholm, due to arrive in Portland off the coast of Dorset imminently, Rishi Sunak said last week that the government had acquired two more vessels as he insisted his plan to “stop the boats” is working.

He declined to say where they would be moored, but there has been speculation they could be docked around Liverpool and Middlesbrough.