More than 100,000 children will wake up homeless on Christmas Day across Britain, the equivalent of four in every school in the country, according to Shelter.
The charity said councils have a duty to find homeless children and their families somewhere to sleep.
But it said councils are increasingly being forced to move more and more homeless families into cramped bed and breakfasts and hostels.
The number of children living in such temporary accommodation is at the highest level since 2008 and is expected to hit 105,251 by the end of 2015, the charity said.
Shelter said that with councils under pressure from the affordable housing shortage, the number of families living in B&Bs - accommodation which is often cramped and unsuitable for children - has more than trebled over the last five years and risen by 25% in the last 12 months.
In mid-2010, around 800 families were living in B&Bs. That figure now stands at around 2,700, according to the charity.
The charity said it is struggling to cope with demand for help from the growing numbers of families battling to keep a roof over their heads.
It said families reported:
Living in unfit and often dangerous conditions where exposure to drug and alcohol abuse was common.
Living in single rooms, with children and their parents often having to share a bed in rooms which were in a state of disrepair and not secure.
Having to eat meals on the floor or on their bed as very few had space for a table or a fit communal area to eat in.
Sharing toilets and washing facilities with other residents with many reporting bathrooms to be in poor condition with unlockable doors, slippery or cracked tiles and dangling electrical wires.
Their children's emotional well-being and development being badly affected by the lack of permanent housing, with reports of bed-wetting, anxiety, and distress
The charity, which has launched an emergency Christmas appeal, said in some cases the impact was so severe that parents reported that children developed worrying behaviours including one child who began to self-harm and a six-year-old boy who developed a nervous tick due to anxiety.
You can support Shelter's emergency Christmas appeal here.