A Franz Josef hotel severely damaged by flooding in March will buy five government-owned units in Kaiapoi, north of Christchurch, to house staff and temporary workers.
The number of international tourist visiting New Zealand is expected to rise to over four million over the next few years.
The homes of many workers at Franz Josef Glacier's Scenic Circle Hotel were flooded when the nearby river burst its banks in late March.
The units were among 22 previously used for temporary accommodation for families whose homes were being repaired after damage in the Christchurch earthquake.
The other 17 had already been sold.
Building and Housing Minister Nick Smith said using the units was a pragmatic response to the problem caused by the floods in Franz Josef.
He said the units were being sold at a fair market price and he would work with the Westland District Council and the local community to find a long-term solution to the problem of finding housing for local workers.
"Their community [in Franz Josef] would much prefer to have a stable base of Kiwi families that were supporting that visitor industry rather than being so dependent on work permits that don't build that same sense of community," he said.
"When you've got a tourism sector that is booming it is also concerning that so many of the jobs are going to work permit [holders] and visitors when places like Franz Josef and quite frankly Queenstown, we need to have affordable worker accommodation so that we can build long-term base New Zealand families."
Out of a total database of 25,000 ratepayers in Queenstown, there were 2142 ratepayers who supplied an overseas address.
"I just love reading the evidence of one of the hearings for a new subdivision, where a neighbour who was objecting to the size of sections insisted that none of the sections be less than 250,000 square metres, and went under scrutiny and said that means the properties will be over $2 million each - said 'I'd much prefer the people pouring the coffee and changing the beds be living in Cromwell and Invercargill'."