A former council leader said an influx of Polish workers had had a “huge” impact on the city’s public services.
Tory councillor Royston Smith said the, then, Government had refused to listen to demands for extra funding because it did not recognise the increase.
He was speaking after Mr Denham, a former minister, said the Labour government had been wrongly advised about the number of migrants who would enter the UK after new countries entered the EU.
The UK government chose to allow uncontrolled immigration from new EU states including Poland in 2004. Other EU countries put temporary restrictions in place.
Mr Denham, the MP for Southampton Itchen, said: “It became clear the estimates we had relied on were vastly wrong.
We expected 15,000 migrants and 15,000 came to Southampton.”
At its peak, Southampton was estimated to have received more than 20,000 immigrants from Eastern Europe, largely from Poland. Cllr Smith, whose party led the council from 2007 until this year, said: “What John Denham is admitting is that he knew, while he was in government, Southampton was massively underfunded."