Charity says that migrants from eastern Europe who do not qualify for benefits are sleeping rough in appalling conditions

Homeless migrants from eastern Europe in London who are unable to get benefits have become so impoverished that they are eating rats and drinking lethal cocktails of alcoholic handwash, a homeless charity has warned.

Jeremy Swain, chief executive of Thames Reach, one of UK's biggest homeless charities, said he had been appalled by the conditions of destitute rough sleepers from new EU states, who now make up more than a quarter of those on the streets of the capital.

"We have come across homeless Poles in north London barbecuing rats. We have to explain to them that unlike the rats back home, in London they would be full of poison. The health risks are enormous," he said.

A camp that was home to half a dozen Polish rough sleepers was closed down in March. The Guardian spoke to Megan Stewart of Thames Reach outreach team who found the site. She visited on three occasions and found people eating cooked rats, which had either been toasted over a fire or stewed in a pot.

"It was the worst thing I had seen in three decades of working with the homeless," said Stewart.

Eastern European rough sleepers are often left to fend for themselves. Unless they have worked full-time for a year, migrants from the 10 former eastern bloc countries that joined the EU in 2004 and 2007 do not qualify for welfare such as housing benefits, which British homeless people can use to pay for hostels.

This leaves these rough sleepers open to exploitation. The men eating rats said they were employed by local off-licences to unload deliveries and paid in bottles of superstrong White Ace cider, a three-litre bottle of which contains 22 units of alcohol – more than five times the recommended daily limit for a man.

Extreme alcoholism, said Swain, had claimed lives. "Alcohol is a killer." He added that handwash fluid had been stolen from hospitals. "It's about 70% alcohol. If you don't you mix enough water then it's lethal … we've had four bodies this year."

Richard Blakeway, the London mayor's director of housing, said it was shocking to hear of the plight of EU migrants but this only confirmed that "rough sleeping really is the worst option". "I think it's clear that employment or returning home are far better ideas."

Many EU rough sleepers stay in London because they think – often incorrectly – there is a only a limited safety net in their own country. Thames Reach has been working with Polish charities to get people home, under a £200,0000 scheme funded by the government. The money is used first to detox rough sleepers, reunite them with their families and prepare them for work in their home nations.

Within sight of Canary Wharf, half a dozen rough sleepers live in squalor of rotting mattresses and fetid pools of stinking water. All have similar stories: they have lost jobs and fallen into a world of heavy drinking and rough sleeping.

Vladimir Lipsky, 40, came from Poland in 2005. Last week he bedded down under a flyover in east London – and slept with one eye open to avoid being pelted by stones hurled by local children. "These kids attack us for no reason. No money. No life. What have I done to them?"

In such dire straits Lipsky says he has volunteered to go home – joining 400 others who have returned in the past 18 months. Swain said sending back rough sleepers paid for itself. He said the scheme saved taxpayers at least £250,000 as the homeless ended up in A&E five times more often than a regular citizen and were 15 times more likely to be a victim of violence.