Tamatha Paul, who is also the MP for Wellington Central, visited Dunedin as part of a "housing hui" earlier this week.
She was particularly disappointed to hear about Albertson Ave in Port Chalmers, where land once set aside for 12 new state homes has been put up for sale by government housing agency Kāinga Ora.
It previously bowled six older state homes on the same plot to make way for the upgrades.
"It represents a trampling of the community’s expectations.
"[It] is one really indicative story in the sorry tale of how [the agency] had promised so much and then pulled the rug from under the communities."
Earlier this year, Kāinga Ora cancelled 10 housing projects in Dunedin that would have delivered 120 new homes.
It came in the wake of a review commissioned by former prime minister Sir Bill English, who said the agency had become too loaded with debt and unsustainable.
"The government is not tinkering with state housing. They just ideologically believe that the state are not up to delivering housing," Ms Paul said.
She called on Kāinga Ora to acknowledge "housing as a human right" and reverse decisions such as the one made about Port Chalmers.
There would need to be about 35,000 state houses built nationwide over time to meet the needs of those on the housing register alone.
She felt there also needed to be a "cross-party" agreement on the building of state housing, so contractors and the building industry in general had certainty.
Meanwhile, the petition calling for Kāinga Ora to stop the sell-off of Port Chalmers land will be delivered to its Dunedin offices on Monday at 10am.
A Kāinga Ora spokeswoman said like any developer, it was continually reviewing the land it owned to see if it was still fit for purpose and as such, divestment of sites was an ongoing process.
"For sites where projects have been stopped, we are working our way through the best options, including potential divestment," she said.
"As decisions are made, we aim to keep local communities informed."
