It's cruel and ridiculous. What a waste of public money, putting in the adaptations, then evicting the person they are designed for, re-housing the person then in the end having to adapt another property - quite apart from the sheer misery endured by this woman.
The discretionary housing payment is not a solution. It is discretionary, so there are no guarantees, I understand it is a limited pot, so if you are last in the queue, tough shit, and there are also no guarantees it will be there next year, or have the same funds next year.
I'd take the council's defence with a pinch of salt - of course they are going to attempt to justify their actions.