The Labour Party has announced plans to build 1000 state houses a year until demand is met.
Under the policy, Labour would turn Housing New Zealand (HNZ) from a state-owned enterprise into a "public service" or a Ministry.
This afternoon Labour leader Andrew Little told reporters that HNZ seems to see itself as a "glorified property manager".
He said people who need housing are currently getting the "run around a lot" when dealing with housing issues.
"It doesn't make sense for the people who are dependent on HNZ to have to go through another Government department before they can go to the department that's providing them with the house."
He said as a Ministry, their job would be to "look after the most vulnerable, to provide them housing."
Speaking to TV3's The Nation this morning, Mr Little indicated it could take five years of building state houses before demand was met, and that the Housing New Zealand (HNZ) dividend would be used to build the homes.
This financial year, HNZ is expecting to pay a $188m dividend to the Crown.
"We're looking at least 1000 a year until we meet demand. This Government has sold 2500 state houses, reduced the housing stock. It has a plan to sell 8000 more," Mr Little said.
The state housing policy would be in addition to Kiwibuild - Labour's plans to build more affordable houses overall.
Labour's Kiwibuild would see 100,000 houses built over a 10 year period. Mr Little indicated the initial target of 800 houses in the first year will be "ramped up" over a two to three year period.
Mr Little said the type of housing may be different to what was initially contemplated.
"It can't all be a stand-alone house on a quarter-acre section. Those days are gone."
In 2010, an affordable house would cost $300,000. Mr Little says an "affordable" house would now cost $400,000-$500,000 to purchase in Auckland.
Mr Little said rules and regulations to prevent speculators purchasing and on-selling Kiwibuild homes will be announced tomorrow.