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Who said an undertaking was given? That does not tend to happen with spouse visa applications.Obviosuly claiming benefits goes against the undertaking you gave when your wife applied for her visa ( ie that you will provide,support and maintain her without recourse to public funds). There is possibility that her ILR can be refused at the end of her two year period.
Why not? He is perfectly entitled to apply for Council Housing.However para 6A of the Immigration Rules is in play as regards Council Housing, but all that means is that the accommodation to be provided must not be bigger on account of the wife living there. But Councils tend to allocate exactly the same size of accommodation to "single parent with one child" or to "couple with one child", so in practice the para 6A restriction is not a problem.You as a British citizen are within your rights to claim benefits in your own name ( ie child benefit (when he is born), working tax credit etc). However dont apply for Council housing till at least she gets her ILR.