Finance Minister Bill English has warned Auckland Council to change its planning processes to encourage the building of more affordable housing or face Government action.
Mr English said changes are needed to make more land available for building and to ensure more smaller, low-cost houses are built.
He rejected criticism that the Government is not doing enough to help rein in rising house prices in Auckland and said the council has to do its bit as well.
Mr English said the Government will play its part by building about 1000 new state houses in the city over the next year or two.
Auckland Mayor Len Brown said the council has several plans in place to help open more land and 20,000 sections are already available to be built on.