Auckland City Mission will get $27 million from the government to build 80 units in the city centre.
It's part of a $75m project the mission has unveiled to provide permanent accommodation for rough sleepers and vulnerable Kiwis.
The building will house the mission on the first three floors then comprise 80 studio and one bedroom apartments on the upper levels.
"The government will provide $27 million in funding towards the project with the Auckland City Mission and wider Auckland community contributing the remainder of the cost," Social Housing Minister Amy Adams said on Thursday.
The government has also announced plans to expand its Housing First programme to ease chronic homelessness.
An additional 100 places will be added to 472 in Auckland.
Services in Christchurch and Tauranga will be lifted to 100 places and to 150 in Wellington.