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The Supreme Court has overturned a decision by Birmingham City Council to declare a mum-of-four as "intentionally homeless" after she could not afford to pay her rent.
Terryann Samuels fell into arrears in 2011 after a shortfall between her housing benefit and £700-a-month rent for a house in West Bromwich.
The council found her home was "affordable" and she had "flexibility" in her budget, which was made up of other benefits including welfare and child tax credits.
"I find it hard to see on what basis the finding of intentional homelessness could be properly upheld," Lord Carnwath, one of five Supreme Court judges looking at the case, said.
It was ruled Ms Samuels should not have had to use her other benefits to make up the shortfall in housing-related benefits and the judges called on the council to "accept full responsibility".
Homelessness charities supporting Ms Samuels, Shelter and Child Poverty Action Group, welcomed the ruling.
When someone is forced to choose between rent and keeping their children fed, they cannot be viewed as 'intentionally' homeless when they choose the latter."
A new charity collaboration is hoping to take a fresh approach on tackling the problems on the region's streets.
The Northern Inclusion Consortium is linking four charities relating to drugs, homelessness, crime and mental health.
The idea is that these problems can be connected, so the approach must be also be connected.
Director of the consortium, Jessie Jo Jacobs, said: "We're seeing issues that are getting worse.
"I think the North East is now the capital in the country for drug deaths and mental health issues are high so everyone recognises that things are not going the right way and because of that there is a real heart to do things differently."
New powers to curb anti-social behaviour in Birmingham would not criminalise the homeless, a councillor has said.
The city council is considering implementing a Public Space Protection Order (PSPO) to prohibit begging and street-drinking in the city centre from the Jewellery Quarter to Digbeth.
At a scrutiny meeting earlier, the city's cabinet member for social inclusion John Cotton, said: "Any move that criminalises homeless people, that is purely and simply a line that myself and my colleagues will not cross."
The three-year order would see police officers able to direct vulnerable people to support services and give out letters by hand to those who are found in breach.
Stories from the streets of Birmingham of disabled and homeless men struggling to find a permanent home.