The organisation fears the Asylum and Immigration Bill, still going through Parliament, could split up families because it would ban failed asylum seekers from receiving benefit.
If the child's welfare is compromised they can be taken into local authority care - but no one over 18 can be housed, meaning parents could become separated from their children. The proposed charity would help pay for the accommodation necessary to keep them together.
Ian Johnston, the association's director, said: "Of course, we would want the Government to back down and we have been getting mixed messages - we have heard some placatory noises from the Home Office.
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