A vicar took a family of nine Syrian refugees into her home upon finding them "shaking and crying" after they were abused by a neighbour having been placed in an alleged "hotbed" of racist sentiment, Christian Today has learned.

Rev Sally Smith, team vicar in the Hanley Team Ministry in Stoke-on-Trent and diocesan advisor for vulnerable adults, was contacted by NHS mental health officials and says she "responded in the only way I knew to as a Christian with compassion".

The family arrived from Syria on 30 June. Smith says that they were taken to a council estate where local people have previously supported and elected councillors for racist political parties. "The families...were taken to their new homes which unbelievably, were located in...a large council housing estate, well known nationally to be a hotbed of BNP [British National Party] and EDL [English Defence League] activity," she said. The BNP held council seats in the area until 2011.

"Inevitably, within hours one of the families was subjected to terrifying abuse by a gang led by a neighbour," said Smith, who did not witness the incident but spoke to others who were there and the family through an interpreter.

A source close to the council strongly denied that a "gang" was involved and said that the "isolated" incident occurred because one next-door neighbour – from a privately owned house – was angered by noises made by works taking place on the council house in order to house the refugees. The source added that the authorities had no record of any previous disturbances from the individual concerned.

Amid attempts to house some of the 20,000 Syrian refugees who have been promised asylum by Prime Minister David Cameron, Smith says that Stoke-on-Trent City Council refused to consult local churches and faith groups including Sanctus St Mark's, a support group for refugees and asylum seekers, which she leads.

Since a recent announcement that the council would offer a home to 20 Syrian refugees from a camp as part of the Vulnerable Peoples Resettlement Scheme [VPRS], church and other groups offered their assistance, and several forums have been chaired by a local Christian charity called Saltbox. The council source said that they were given six weeks by the Home Office to find accommodation.

"There were several groups offering specific support for asylum seekers and refugees in Stoke on Trent, and we work and communicate well with each other," said Smith. "However, the City Council chose not to engage with any of us, and employed their own staff to resettle the families, in conjunction with the Citizens Advice Bureau whom they had commissioned to offer them advice."

The council source said that every effort had been made to find an area in which the families could be housed near one another and close to local schools and health facilities.

After the incident, the family was then taken to another house on the same road where extended family members had been housed. According to Smith, they were given advice on how to call 999 and an empty police car was parked outside the house as a deterrent.

"This was clearly not reassuring for the family, who have come from a culture where the police would not normally be trusted," said Smith. "I was contacted on Friday evening by NHS [mental health] professionals, to offer the family support over the weekend, a quite normal occurrence, as at Sanctus we do that regularly. I visited the family with our interpreter, and it quickly became obvious that this terrified extended family of three adults and six children under the age of nine, could not remain in this house. They were shaking and crying, and even asked to be taken back to Syria."

Smith then decided to give up her own home and bed for the refugees. "I could not leave them in that state, so the only option available to me was to take them back to my house, where we gave them a meal to break their fast, and we gave them our beds, as we slept on sofas."

The following afternoon the family were taken to a hotel, arranged by the council, who are now working with them to find alternative accommodation.

The council source expressed disappointment at the outcome as the family now cannot be moved back into the same house because it has since been secured as a result of their belongings being left there.

Smith said: "To be honest, I had no intention of getting involved in this. I was called up by mental health professionals – felt this family didn't feel fine, they were terrified."

The council source strongly disputed Smith's account, and emphasised that the vicar was not present to witness it.

But Smith said: "Of course I wasn't there – it was nothing to do with me – I was called in for some extra support. I'm sure with hindsight there are lots of things that could have been done differently but the situation was what it was and is what it is and we all need to work together. We want to work with the council but there does not seem to be a culture of people working with groups like us – hopefully there will be in the future. They disregarded ordinary on the ground people who are very involved with the community and know how the community works. We are very embedded in our community. You would hope that when councils are making decisions about where to go they would listen to us."

Asked about concerns that the council had few options when it came to housing the refugees, Smith said: "There are loads of empty properties in Stoke-on-Trent."

When it was put to Smith that there has not been a BNP or EDL councillor in the area for five years, she said: "The families who voted them in are still there."

She added: "I have a strong sense of justice and if the church isn't going to speak the truth then who is? I don't really care about my personal reputation."

Sanctus St Marks "exists to welcome, support and walk alongside people who are isolated, due to leaving behind the country of their birth to seek sanctuary in the UK."