The Home Office has braced itself for a wave of legal challenges from other councils over the use of hotels in their areas, fearing Epping’s victory would set a precedent.

But Lord Justice Bean said the High Court ruling by Mr Justice Eyre failed to consider the challenges of relocating the migrants.

“The judge’s approach ignores the obvious consequence that the closure of one site means capacity needs to be identified elsewhere in the system,” he said, reading the ruling made by him and two other Court of Appeal judges.

Reacting to the latest ruling, Conservative leader Kemi Badenoch said it “puts the rights of illegal immigrants above the rights of the British people”.

Protesters started to gather outside the Bell in the hours after the judgement – with several Union Jack and St George’s flags being waved.

A BBC reporter observed an asylum seeker being heckled.

A full High Court hearing to decide on a permanent injunction for the Bell is expected in mid-October.

Thousands of people have attended anti-immigration protests and counter-demonstrations outside The Bell Hotel since July.

It followed an asylum seeker housed there being arrested and subsequently charged with several offences including the sexually assault of a 14-year-old girl.

Hadush Kebatu, who is from Ethiopia, denies the offences and has been on trial.

The protests acted as a trigger for the council to apply for an injunction, its legal team said in court.

Lord Justice Bean said this was “worrying”, adding: “If an outbreak of protest enhances a case, this runs the risk of acting as an impetus for further protests – some of which may be disorderly – around asylum accommodation.

“There is a risk of encouraging further lawlessness.”

Police say 25 arrests have been made in connection with disorder outside the hotel, with 16 people charged.

Lord Justice Bean said Mr Justice Eyre “made a number of errors” when imposing the injunction on 19 August.

Criticism was also levelled at the High Court judge’s refusal to allow Home Secretary Yvette Cooper’s 11th-hour attempt to dismiss the council’s case.

That would have given him more insight into the challenge of relocating the asylum seekers, Lord Justice Bean added.

At the High Court, Epping Forest District Council claimed that the Bell owner Somani Hotels breached planning rules by turning the site into asylum accommodation.

“The battle is not over and we will continue the fight,” a spokesperson said earlier.

“It is nothing less than the people of Epping would expect and deserve.”

Neil Hudson, the Tory MP for Epping Forest, said the judgement was a “dreadful decision”.

Reform UK leader Nigel Farage claimed the government had used European human rights legislation “against the people of Epping” and that migrants had “more rights than the British people under Starmer”.

While European human rights law was mentioned by the government in its written arguments, it was not a major part of its argument, nor the Court of Appeal’s decision according to a summary of the ruling.

Steve Smith, chief executive of refugee charity Care4Calais, said the ruling “made it clear that violent protest, and in many cases overt racism, is not a fast-track route for the far right to attack the rights of people seeking sanctuary in this country”.

Liberal Democrat home affairs spokeswoman, Lisa Smart, told the BBC that Labour should be “speeding up asylum processing to bring down the backlog and end hotel use once and for all”.

Border Security and Asylum Minister Dame Angela Eagle said the government “will stop using hotels, which aren’t a sustainable solution, by the end of this Parliament.

“This judgement assists us by allowing us to do that in a planned and orderly fashion”.

She added: “We all want the same thing, which is to get out of asylum hotels”.