Lewisham Council has apologised for placing a family in such poor accommodation that a child had to go to hospital.
The London borough has agreed to pay her more than £14,000 after the local government ombudsman ruled it had handled the mother's case badly.
The ombudsman said the council had failed to properly consider the mother's priority on its housing register for permanent social housing despite the fact that she was disabled and pregnant at the time.
It failed to properly consider her human rights or its duties to her under The Equality Act, the ombudsman said, and did not consider or respond to her concerns about accommodation being close to a perpetrator of domestic abuse towards her.
The family lived in unsuitable accommodation for two years and faced continued instability, with frequent short term moves between multiple bed and breakfasts, often with no notice.
A council spokesman said: 'We have accepted the ombudsman’s recommendations in this case and apologise unreservedly to the resident and her family.
'We expect our housing, whether managed directly by us or leased from the private sector, to be properly maintained, and we are sorry this was not the experience of this family.'
