Council officials on the so-called English Riviera are investigating claims tourists have pitched tents near a popular beach in an attempt to avoid paying high accommodation prices.
Community leaders have expressed fury at "freeloaders" exploiting a loophole to enjoy a cheap staycation in Torquay, Devon.
Costs of a coastal stay in the UK have increased this year due to the difficulties of travelling abroad, but the campers have been accused of taking the place of genuine homeless people.
Roger Carter, chairman of the Cockington, Chelston and Livermead Community Partnership, said: "This is not about the homeless problem – these people are having a free holiday at the expense of Torbay taxpayers. It's just not acceptable.
"The toilet block at Corbyn Head is closed – what about personal hygiene? Where are they going to the toilet.
“You've got a family beach down below where children are playing in the sand."
At least seven tents were spotted over the weekend, with campers seen cooking meals on gas cookers.
Carter said the people camping “are not homeless” and said “the buck stops with the council”.
Locals gave a mixed reaction to the claims with some criticising the tents but others believing huge holiday rates could push families to find cheaper alternatives.
One person wrote on Facebook: "If resorts didn't bump up their prices they wouldn't be there - so good on them, hope they enjoy."
Torbay Council said they were aware of “unauthorised encampments” and they are “taking the necessary steps to determine the appropriate course of action”.
A spokesperson would not comment on claims the tents were inhabited by tourists but told Yahoo News UK: “Our officers have been visiting the locations and are carrying out the necessary welfare checks.
“We are also assisting the occupants with a more permanent housing solution which is all the more difficult under the current housing crisis.
“We have strict legal processes to follow before an encampment can be moved. We will conduct all parts of the process as swiftly as possible, whilst treating all those involved with dignity and respect.”