The government's crackdown on asylum seekers could lead to a £1 billion budget overspend, according to press reports.

Newspaper revelations of the soaring asylum bill followed a UN warning that European fears over immigration were "alarmist and dangerous".

Conservatives have described press reports of a £1.47 billion cost for handling asylum applications - only £434 million was budgeted for - as "terrifying".

The shadow home secretary, Oliver Letwin, accused David Blunkett of presiding over a system which had "spiralled completely out of control".

Over the last year the cost of supporting those seeking refugee status was £1.05 billion, more than double the £403 million predicted by the Home Office.

And the Sunday Telegraph quoted an Immigration and Nationality Directorate document which stated: "The estimate provision asylum support in 2002-3 is £434 million, but it is unlikely that this sum will be sufficient to meet our needs".

"In that event it will be necessary for us to make a claim on HM Treasury's reserves," said the memo.

A Home Office spokesman told PA News: "The 2002-03 budget is £434 million. That is unlikely to cover costs, but we haven't given out a figure of what we estimate the cost will be."

The IND budget pays for benefits for asylum seekers, reimburses local authorities and also funds the UK Immigration Service and the National Asylum Support Service.

Earlier the home secretary rejected UN claims that UK debate on immigration was "alarmist".

The UN High Commission for Refugees published figures showing that Europe's asylum applications had almost halved in the last decade.

Statistics found that annual applications for asylum in the EU had plummeted from 675,460 in 1992 - at the height of civil war in the Balkans - to 374,530 in 2001.In Britain just 0.97 annual applications are made for every 1000 UK inhabitants.

And the UNHCR has warned that an "overheated" asylum debate "could have very dangerous results for future refugees".

"UNHCR is concerned that the current debate in Europe is getting considerably. If this results in rushed policy and lawmaking it could have very dangerous results for future refugees," said spokesman Robert Colville.