The Government is to allow state house tenants to buy their houses.
It is promising new state houses will be built to replace those being sold, keeping the number at the current level of nearly 70,000 state homes.
Housing Minister Phil Heatley told Nine to Noon on Wednesday the policy will benefit tenants and those waiting for a house.
He said the sales will fund a programme to build new houses for people on waiting lists.
The Housing Lobby Group says it is a repeat of the National Government's Home Buy scheme from the 1990s.
Spokeswoman Sue Henry says the average income of someone living in a state house is about $17,000 per year and they "simply won't be able to afford" to buy a house.
The Monte Cecelia Housing Trust, based in Auckland, says it also does not support the plan. It wants more state houses to be built in addition to the current stock.
Chief executive David Zussman says the organisation gets 80 calls a month from people who desperately need a home.