It was "totally inappropriate" to transport asylum seekers in a 16-seat stretch limo from London to Manchester, the Home Office has said.
But the government department denied a Daily Mail report that taxpayers would have to pay £3,000 for the trip, saying Serco, the contractor charged with moving asylum seekers, had taken responsibility for the move.
The Mail revealed the use of the limo on its front page on Wednesday, reporting 'guess what, you're picking up the £3,000 bill!'
According to The Mail and The Sun, the stretch limo arrived in Longford, a village on the outskirts of London near Heathrow, where asylum seekers are housed while their applications are considered.
It transported seven men, believed to be from Africa, from the hotel they were being put up in to Manchester and the driver told locals his bill was being paid by the Home Office. A pub landlord told the Mail: "I thought it must be a stag do."
According to Serco, the limo was only used once at the beginning of July.
Asylum seekers are normally transported in minibuses. HuffPost UK understands that Serco contracted out some of the transport at the time due to the numbers travelling.
A Home Office spokeswoman said: "Our contractors are responsible for arranging the transport of asylum seekers and bear the cost of doing so. However, this incident was totally inappropriate and Serco has apologised.
"The terms of our contract with Serco requires them to take all reasonable steps to ensure transport is appropriate. We have reminded the company of their contractual obligations and expressed our strong disapproval.
"There was no additional cost to the taxpayer.”
Jenni Halliday, Serco’s Contract Director for Compass, said: “The transport provided, on this one occasion in July, was clearly inappropriate.
"We have apologised to the Home Office and our internal processes have been changed to ensure that this will not happen again."