The Green Party says under the Government's new welfare policy, beneficiaries could be coerced into using long-acting contraception.
The Government has set aside $1 million over the next four years to subsidise medical appointments to arrange contraception such as as implants or intra-uterine devices (IUDs) for women on a benefit and their teenage daughters.
The subsidy will be available to female dependants of beneficiaries aged 16 to 18 from July this year and for all other female beneficiaries from mid-October.
In Parliament on Tuesday afternoon, Green Party co-leader Metiria Turei asked if Work and Income case workers would be pressuring women to use long-acting contraception.
"Can the Prime Minister guarantee that not one single young mother will be told by their case worker in some form 'You should take up this offer'".
Prime Minister John Key described the policy as sensible and stressed that it will be voluntary.
However, Mr Key says case managers will ensure that mothers know that if they are getting the Domestic Purposes Benefit (DPB) and have another baby, they will be work-tested when that child is aged one.
The Government estimates up to 10% of women of child bearing age on a benefit, about 1500 people, could take up the subsidy.
Social Development Minister Paula Bennett on Tuesday defended the plan to subsidise contraception for women on the benefit, telling Radio New Zealand's Morning Report programme the subsidy is simply about family planning and offering choice.
Ms Bennett says the subsidy is not compulsory and the Government is simply offering a way for women on the benefit to overcome cost barriers to contraception. Some contraception is already fully funded through the Government's drug-buying agency Pharmac.
But Labour's social development spokesperson Jacinda Ardern says Work and Income offices are not the place to discuss contraception.
Ms Ardern is sceptical about the assurance that there is no compulsory element to the scheme and says a conversation about contraception should never be had between a woman and a Work and Income case worker.
Move 'insulting and inappropriate'
A beneficiaries advocate says it is inappropriate for Work and Income case workers to discuss contraception with clients.
Prime Minister John Key says case workers know their clients well and can discuss such issues with them.
But Karen Pattie, an advocate with the Beneficiaries Advocacy and Information Service, told Radio New Zealand's Checkpoint programme there is no close relationship any more.
"About 18 months ago, Work and Income changed their policy so a case worker saw whoever came in. They didn't have ongoing clients, so they didn't get to build a relationship with them and the case workers really have no idea as to who is sitting in front of them."
Ms Pattie says to provide such advice on contraception, Work and Income staff would need to undergo extensive counselling and medical training.
The Beneficiary Advisory Service in Christchurch says it can be costly for anyone on a tight budget and targeting beneficiaries is insulting.
Spokesperson Rebecca Occleston told Morning Report the Government is implying that people on the benefit are deliberately having children to get more money - and that is offensive.