Housing New Zealand is planning on spending $45 million on subdividing and redeveloping 80 properties in Auckland to accommodate more than 150 homes.
It says some of the sections are very large and are being used for single, standalone, rundown houses.
About half of the existing houses will be refurbished and the rest replaced.
Twenty four clusters of land have been identified for redevelopment, most of them in Avondale, New Lynn and Kelston.
Some of the finished houses will be state rentals. The rest will be sold to private owners or used for other social programmes.
Housing New Zealand says the number of homes for state tenants should remain close to existing levels.