The Britannia Hotel in the city centre and The Quality, formerly The Connaught, on Tettenhall Road, are housing asylum seekers from Syria, Sudan and Eritrea.
But the move has prompted legal action from the city council which has ordered the Britannia to 'remove the asylum seekers from your premises'.
The council's letter to the Britannia Hotel states: "The council understands that, on behalf of the Home Office, G4S are transporting asylum seekers from London to Wolverhampton and these are to reside at your hotel, the Britannia, whilst their asylum applications are processed. If you accommodate these asylum seekers upon this basis this would potentially amount to a breach of planning permission and be unlawful.
"This is because there would be a change of use in respect of your establishment in its use would change from a hotel to a hostel.
"I must warn you now if you accommodate the asylum seekers, the council has the power to consider using its planning enforcement upon you and/or obtain an injunction prohibiting you from taking in the asylum seekers and requiring you to remove the asylum seekers from your premises.
"Failure to comply with any such orders is punishable by fines and, in the case of injunction, imprisonment."
Councillor Lawrence added: "While we recognise asylum seeker numbers are at unprecedented levels nationally, we don't believe hotel accommodation – even on a temporary basis – is appropriate.
"Hotel accommodation is wholly unsuitable. It fails to meet the often very complex needs of large numbers of vulnerable people. Simply dumping vulnerable people like these in local hotels isn't an acceptable position."
A letter seen by the Express & Star threatens the owners with an injunction for a breach of their planning permission involving a 'change of use from a hotel to a hostel'.
It warns that failure to comply could see bosses being sent to jail.
It is not known what legal response the Britannia has made, although asylum seekers are still believed to be staying there.
They have been placed in the venues by security firm G4S which has a multi-million pound deal with the Home Office to house the migrants.
They get three meals a day and £35 a week spending money.
A source close to the former Connaught said: "Bosses are keeping it very quiet.
"They are staying in the back bedrooms in the hotel and don't eat in the normal restaurant, they get fed in the Grand Suite.
"They've been here for about a week and staff are expecting more in the next fortnight.
"I would love to stay in a three-star hotel and have a bed, breakfast, lunch and dinner all provided for me."
G4S confirmed asylum seekers are staying at the hotels, but declined to say how many. However a source from inside each hotel confirmed that there were 'around 30' in each.
Wolverhampton council leader Roger Lawrence said the situation was 'wholly unsuitable'.
He said: "Simply dumping vulnerable people like these in hotels isn't acceptable to me or the council."
Mr Lawrence is also chairman of the West Midlands Strategic Migration Partnership and he added: "We believe that around one-third of all claimants nationally are being accommodated in the West Midlands.
"I am asking the Home Office to look at the number of local authorities that asylum seekers are dispersed to. A small number are shouldering an unfair burden, including ourselves.
"I'm seeking urgent talks with the Government to get a fairer solution for 'under the cosh' authorities in the West Midlands."
A twin room in the Britannia this week costs £39 and £45 in the Quality.
The Express & Star spoke to two asylum seekers staying in the Quality Hotel. Both had travelled from Calais. It is unknown if those staying in the hotels are yet to apply for asylum, waiting to hear back about their application, or have had their applications rejected.
G4S spokesman Michael Baker said: "We occasionally have to make use of hotels to manage demand while more permanent arrangements are made. Any additional cost for this is met by the company and not the taxpayer."
The Home Office said hotels were only ever used as 'a short-term contingency measure'.
A manager at The Quality said: "We can't disclose any information about guests."
The Britannia would merely say 'we have lots of guests'.