David Blunkett's plans tear apart his predecessor Jack Straw's unpopular schemes, but there is a long way to go before councils will know whether the latest version will really ease the crisis.
The fourth big overhaul of the system in a decade introduces an identity card scheme, coupled with increased resources to deal with a backlog of applications.
But it will take several years to introduce the system, expected to cost around£350m, and council landlords will be expected to see out their contracts.
Some councils breathed a sigh of relief on hearing the system is to be scrapped, but questions remain over where the new induction, reporting and accommodation centres will be built.
Glasgow City Council welcomed the plan, but expressed concern over the placing of the new centres, fearing asylum seekers will be more identifiable and so more vulnerable to attack.
Kent CC's Conservative leader Sandy Bruce-Lockhart said asylum applications need to be dealt with more quickly and the government has failed to address the issue of how to safely repatriate refugees after failed applications.
There are questions over how education and social services will be delivered to the centres.
Welsh Local Government Association director Sandy Blair said there may be abortive costs involved in the plans being drawn up by councils to deal with the arrival of asylum seekers.
Councils welcomed the end of the voucher system and the introduction of ID cards, which will become cash debit cards from autumn next year.
Ending the use of prisons for holding asylum seekers has been well received, particularly in Wales where the issue had put local government minister Edwina
Hart at loggerheads with Westminster.
But Treasury cash is limited and it looks likely the latest reforms will not be fully in place for nearly five years. In the meantime councils will still be expected to deal with the ever-increasing number of people seeking refuge.