Rome authorities are now playing a very un-fun game of musical chairs, trying to find homes for hundreds of people sleeping in tents in extreme heat after talks to save Italy's most high-profile housing and social assistance centre collapsed amid Giorgia Meloni's government crackdown on squatted buildings.

The approximately 400 evicted residents of Spin Time Labs, a 10-floor building in Rome's Esquilino district occupied by grassroots groups since 2013, will not be allowed back after its private owner refused Rome council's offer to buy the property. The residents were forced out at the end of last month.

A spokesperson for Italy's interior ministry, which had set its sights on shutting down Spin Time, confirmed that the owner had taken repossession of the building "in accordance with the law."

The move has reignited political debate over occupied or squatted buildings, which Meloni's government regard as dens for criminality - including those supported by leftwing associations. Critics have questioned why Meloni and her coalition allies have long been so decisively against Spin Time while the neofascist CasaPound has occupied a state-owned building in the same neighbourhood for more than 20 years, using the premises as its headquarters.

People of all nationalities, about a quarter of them children, were forced to evacuate Spin Time on 29 July after a minor fire, which was quickly extinguished by a group of residents before it could spread. The building was locked up by police during safety checks, before being placed under two judicial seizure orders - one linked to the owner's long-running legal battle to regain possession and the other to the fire.

While some people were accommodated by friends and family, more than 200, including elderly people and those with ill health, have been sleeping in tents outside the building. One child was hospitalised this week after suffering breathing difficulties.

Rome's leftwing council, supported by the Catholic church-run charity Caritas, is now seeking alternative solutions.

In an interview on In Onda, a talkshow broadcast on the TV channel LA7, the mayor of Rome, Roberto Gualtieri, said the response to the council's offer had been an "irrevocable no" and that despite presenting what he believed was the best possible deal he "had the impression that the decision had already been taken."

The owner had cited unspecified legal weaknesses in the proposal, Gualtieri said, adding that he felt "irritated" about the situation.

He described Spin Time, which over the past decade has transformed into a space offering various social and cultural services, including a food bank, a restaurant and co-working, as "the mirror of a failure of Italy's Second Republic, which stripped away a pillar of welfare." The Second Republic is a political term for the era of government that began in the early 1990s.

The initiative has provided a lifeline for hundreds of people, including Marco Perilli, an Italian construction worker who was one of the community's first residents. He became homeless after a divorce.

As of Friday, people were still camped outside. Perilli said they would continue to do so until a real solution was found. "We are trying to understand how things will proceed but we resist and will continue to resist. The owner refusing the offer means Spin Time is over, but for us it's not over - we will find another space."