Talks on accommodating failed asylum seekers have broken down after the government and local authorities failed to agree.

Junior justice minister Klaas Dijkhoff said the deal had failed because a number of municipalities were not prepared to close their own accommodation services. The local authorities’ umbrella body VNG said Dijkhoff had pulled back from a verbal agreement that the centres could stay open.

‘We agreed with junior minister Dijkhoff that people could continue to be given a bed for the night on an individual basis. But last night he suddenly went back on this,’ said Haarlem’s mayor Jos Wienen on behalf of the VNG.

The so-called ‘bed and board’ deal for people who have been turned down for refugee status has been a bone of contention within the government for over a year. The Liberal (VVD) party initially opposed any kind of shelter because it would encourage people to stay in the country illegally.

But under pressure from its Labour coalition partner (PvdA), it agreed to set up five centres offering basic facilities for people awaiting deportation.

Around 25 local authorities have their own arrangements for housing failed asylum seekers. Dijkhoff argued that allowing these to stay open would undermine the deportation system. He had proposed introducing fines for municipalities that continued to offer shelter.

Dijkhoff said the government would no longer fund municipal shelters, but the question of how to house refugees awaiting deportation will now be left to the new cabinet that takes office after next March’s election.

Labour MP Attje Kuiken said it was disappointing that no deal had been reached. ‘We won’t support a proposed law that does not offer humane accommodation and a new perspective to people whose asylum claims have been rejected,’ she said.

‘This cabinet and the next one need to work on proper bed and board accommodation because living on the streets has never done anyone any good.’