A young woman with depression was told she could "manage being homeless" by a council official.
The anonymous woman was told she didn't qualify for 'priority need' status when she applied for council housing.
She received a letter containing the extraordinary comments after discovering she would lose her emergency B&B accommodation.
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Despite being medically diagnosed with depression and borderline personality disorder, an official from Torbay Council wrote: "You are a person that I am satisfied is able to cope and function reasonably well with 'day to day' living and this would I believe still be the case if you were to become homeless or remain homeless."
The unnamed council official continued to tell the women they are satisfied she "does not have priority needs," under new housing law. The letter claims she is "resilient enough" to manage being homeless even if that consists of sleeping rough "occasionally or in the longer term."
"We are unfortunately, as a result of this decision, not able to continue to provide you with temporary accommodation."
The letter, which has since been shared by charity Humanity Torbay, even admits that the women like anyone else facing homelessness "will inevitably suffer harm."
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Humanity Torbay said in a statement: "We are horrified and shocked that somebody with severe depression and other medical facts is deemed fit to be able to sleep on the streets."
A spokesperson for the charity confirmed they had arranged a temporary safe place for the woman to stay.
In response to Humanity Torbay sharing the letter, Torbay Council has said the extracts of the letter shared on social media do not tell the full story as the council works as hard as possible to help homeless people within the law.
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They added that the person involved has the right to ask for a review of the decision and the council is still trying to find accommodation.
The incident comes after Torbay Council faced a whopping £5.5 million budget cut in September last year. The institution was also listed as one of the 11 most cash strapped councils in the UK, published by the BBC.