My bank account is overdrawn and my housing benefit is due
The law states that a customer requires a minimum amount of money to live on, therefore banks aren't allowed to use housing benefit or any other income-related benefits to repay an overdraft - this is called 'first right of appropriation'.
If you're overdrawn and due a payment of benefits, you need to contact your bank as soon as possible to advise of this payment going into the account. This needs to be done in writing, and it's strongly suggested that you keep a copy for your own records.
Citizens Advice also advises the following:
“In the written instructions the customer gives the bank, the customer should ensure that s/he makes it clear if s/he wishes any regular payments or future deposits to the account to be used to pay for specific items. If the client does not make this clear, s/he will have to give the bank new instructions each time a deposit is made.
This 'right of appropriation' allows a customer to assign any funds entering their account to specific events and needs, not just benefits.”