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.
"If they don't, we feel so strongly we will do anything reasonable to counteract it. It goes against international and human rights law.
"We considered recommending social workers defy the instructions of Government. But I don't know if we could do that or whether it would harm people's employment," Johnston added.
Last week, a report from Parliament's joint committee on human rights said clause seven of the Asylum and Immigration Bill could breach the United Nation's Convention on the Rights of the Child.
The MPs said: "The idea of using children and the threat of taking them into care to persuade adults to co-operate with the authorities in removing them from the country seems to be at odds with the requirement of article 3.1 (of the convention).
"This states: 'In all actions concerning children, courts of law, administrative authorities or legislative bodies, the best interests of the child shall be a primary consideration'."
Separating children from parents would also break the right to respect for family life under article 8.1 of the European Convention on Human Rights.
