The Government is defending the level of Budget funding for social housing saying it is just one of several tools it is using to boost the sector.
Thursday's Budget allocated $30 million for non-governmental agencies' housing projects over three years from 2015. The Salvation Army had said that amount of money would buy only about 100 extra houses at a time when need, especially in Auckland, was severe.
In 2012, the Government gave the sector more than $100 million dollars to kickstart the projects, but that money has run out, and the Labour Party says affected agencies are bewildered by the lack of funding.
Labour Party housing spokesperson Phil Twyford said the sector had been led to expect a much larger amount of funding.
He said building the community housing sector has been a centrepiece of the Government's housing policy, but it has not put its money where its mouth is.
But Housing Minister Nick Smith said the Government had, in addition to the extra money, given agencies grants, made it easier for them to get bank funding, and given them Housing New Zealand homes.
"So the Social Housing Fund is not the only tool for growth of the community housing sector," Dr Smith said.
"It is simply part of the picture, and an extra thirty million dollars is of help, but it is only going to fund a small portion of the growth."