An inquiry into Oxfordshire's over-spending on asylum-seekers has revealed the crisis threatened to spiral out of control.

The independent investigation lists a catalogue of failures that saw Oxfordshire County Council hand over millions of pounds without knowing how many refugees it was supporting.

As Oxfordshire's total of asylum seekers reached 1,300, the lack of proper monitoring and leadership was exploited by private landlords. Council solicitors are going through invoices and negotiating with landlords over past payments.

The report shows how a "culture of spending and reclaiming" resulted in the county council owing £2m to just one bed and breakfast accommodation owner.

It criticises the council for failing to respond as the numbers of refugees arriving in the city rapidly rose. Managers then made no effort to investigate "alternative accommodation options".

Inadequate checks and controls created opportunities for dishonesty. The district auditor's report stated: "There is no evidence of fraud or corruption. There is little to suggest that a significant fraud could not have been perpetrated with a low risk of detection."

The inquiry was set up as it emerged that social services paid some families twice, with landlords able to charge £350 a week for a single room.

Director of social services Mary Robertson said: "We will be taking urgent action to implement the report's recommendations."

She said in some cases the council may have been charged for asylum seekers who had moved on. But the shortage of accommodation in Oxford meant it had been "a seller's market".

The report fails to give details of the full cost of the crisis and much of the £10m so far spent has been claimed back from the Government. But it is believed more than £1m is still owed to landlords, with an additional £650,000 overspend that cannot be claimed back from central Government.

Keith Mitchell, the leader of the county's Conservative group, said: "There has to be concern about the system's failure. "

The report will go before Tuesday's strategy and resources committee.