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State housing funding has been sliced in half in this year's budget at a time when thousands of families are in dire need of housing, the Green Party says.
Funding to buy and improve state houses was cut from $18.1 million to $9m in the budget announced yesterday.
Green Party co-leader Metiria Turei said the latest cut followed an earlier reduction from $120m to $18m.
Housing Minister Phil Heatley defended the cut at the time, saying the $120m was an 18-month "stimulus package" for one-off repair work and new state houses.
Mrs Turei said the Government Home and Housed report found that there was a shortage of 70,000 houses in New Zealand, and that 8500 to 20,000 New Zealand households had extreme housing issues.
"Every New Zealander deserves somewhere decent to sleep. We have a massive problem in this country that this Government is ignoring."
Mr Heatley yesterday said a contingency fund of up to $45 million had been set aside so the Government could respond to recommendations of the Housing Shareholders' Advisory Group.
The group made 19 recommendations in its report last year, with a major plank being that third party providers should be allowed to develop in the affordable and social housing market.
Mr Heatley said extra funding would improve the ability of those providers to significantly increase the amount of housing available to those on lower incomes or with specialised needs.
Mrs Turei said the Green Party fully supported the investment, but $40m would only build about 120 houses.
"It is a drop in the ocean compared to the need out there."