The Government says it is considering leasing some Housing New Zealand stock to be put up for sale, but not because it's struggling to sell them.
As a test run for a nationwide programme, the Government wants to sell up to 1600 state houses in Tauranga and Invercargill to social housing providers.
Horizons Housing, an Australian based charity, has expressed interest in buying some 500.
Social Housing Minister Paula Bennett said a range of options, including leasing some of the houses, was being considered.
Mrs Bennett said the Government's main priority was to find the best provider - whether from New Zealand or overseas.
"This is part of a discovery process...What works best for the tenants and how we can actually increase their involvement in social housing," she said. "For some I'm sure there will be elements of leasing and others I can see them buying outright."
Mrs Bennett said the Government had always been interested in looking at the option of leasing.
She also said any buyer, regardless of where they were from, would need to meet the Government's critieria.
But Labour's leader Andrew Little said it was just part of the Government agenda to sell off state services to private providers.
"We've had our own Government agency running our social housing programme for the last 80 years. Yes, there are problems now but selling it off holus bolus to the Aussies is not the panacea - it's not the answer to the problems."