Housing Minister Phil Heatley is not ruling out reviewable tenancies for current state house tenants.
Changes announced mean that from Friday, only people with the most urgent cases will be allowed to join the state house waiting list. Less needy people will be offered help to find affordable accommodation in the private sector.
New tenants will also become subject to regular reviews of their tenancies and asked to move if their circumstances improve substantially.
The elderly and the disabled will not be affected.
Current tenants are also unaffected, but Mr Heatley warns this could change after the election in November.
The minister says $40 million allocated to community housing groups will help increase options for low income people.
The money is intended to bolster the building and provision of affordable housing, as the Government moves to tighten eligibility for state housing.
Community housing groups will receive more than $24 million to buy or build low income housing, while Maori and rural groups will receive $8 million.
Community groups such as IHC will receive $5 million for community housing initiatives.
The Monte Cecilia Housing Trust says the funding is not enough to deal with the many thousands of people locked out of state housing by the changes.