ASYLUM seekers are using a medical scam to live rent-free in five-bedroom homes across Sydney, where they are getting a better deal than pensioners and have been caught spending taxpayers' hard-earned cash on prostitutes.

Immigration Minister Peter Dutton declared "the con is up" for illegal boat people from Manus and Nauru using "tricky legal moves" to stay in Australia after medical treatment and costing us $40 million a year to house, feed and pay them a salary.

Up to 70 illegal boat people will today be told their free and easy lifestyles will no longer be covered by the Australian taxpayer while seeking medical treatment, with their salary cut off immediately and their free housing ending in the next three weeks.

"They were brought to Australia on the premise that once their medical needs were met they would return to Nauru or Manus," Mr Dutton told The Daily Telegraph.

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