Officials have told the Government that state houses need an estimated $2 billion of maintenance work over the next decade.
A briefing paper from the Department of Building and Housing said money spent recently on state housing had gone mainly on buying properties. That meant less maintenance.
Housing Minister Phil Heatley said it was a shameful legacy from the Labour government.
He said the state of the housing stock was a disgrace and some people were living in squalor.
Mr Heatley said upgrading and maintaining state houses was a priority and there would be an increase in houses in some areas, particularly parts of South Auckland where there are people living in garages.
Meanwhile, the Child Poverty Action Group says increasing the number of houses available to rent will help the Government to reduce the rising cost of supplementing accommodation.
A briefing paper to Mr Heatley says the amount being spent on income-related subsidies for Housing Corporation tenants has risen 70% in the past six years to about $500 million a year.
At the current rate of increase, that amount is predicted to reach $1.15 billion by 2018.
Alan Johnson, an executive member of the
The Child Poverty Action Group says it believes Auckland is short of about 2,500 houses, and that the shortfall is contributing to overcrowding.