The New Zealand aid agency, NZAID, says it will only help provide tourist accommodation on Niue if there's demand and private operators become involved.
MP O'Love Jacobsen has been critical of plans to build accommodation for tourists in the villages on the island.
She says it will be a waste of money because the island already has too much capacity.
But the Pacific director of NZAID, Craig Hawke, says all they have committed to so far is a pilot project.
"We have agreed to, indicatively, put in some sizable further resources under the Halavaka Agreement but those have not been agreed yet with the government, and our discussions are focussed very much around how we can get the private sector into the tourist accommodation sector in Niue."