Opposition MPs say it is "perverse" the Minister of Social Development is ignoring the advice from the Ministry of Health.
The plan to cut benefits for job seekers who fail drug tests has been met with criticism by the Ministry of Health, saying it could cost up to $14 million a year.
In a document obtained by Radio New Zealand the Ministry of Health said the move could have a dubious effect on people's health and overall welfare.
Green party income support spokeswoman Jan Logie said the minister was only using advice that supported her agenda.
"The Social Development Minister arrogantly said she did not need advice from her own department on proposals to drug-test beneficiaries and then ignored the advice she did receive, from the Health Ministry, which highlights serious pitfalls with the policy,
"Paula Bennett's arrogance is breath-taking. Instead of using the department to advise her she has chosen to act on piecemeal information from other undefined sources."
Ms Logie said the Health Ministry advised Ms Bennett that if Cabinet went ahead with the policy it could see recreational drug users pretend they have a more serous problem to avoid penalties.
This could include taking harder drugs that stay in the body for shorter periods of time to avoid positive tests, or to increase their drug-taking to avoid the recreational category.
"The Ministry estimates that the savings Paula Bennett planned to make from cutting benefits and leaving those families in financial strife, could easily be more than eaten up by new cost from the policy," said Ms Logie.
Ms Bennett told Radio New Zealand she would not reconsider sanctioning only drug users based on the Ministry of Health's concerns and said she was going ahead with the policy.
"There is certainly a line between recreational use and addiction and that is challenging in itself and it's something we'll have to work through," she said.
"At the end of the day you've potentially got thousands of New Zealanders who are unable to work because of recreational use and this paper also identifies that as a real problem, so we need to keep working our way through a solution," she said.
Labour social development spokeswoman Jacinda Ardern told Radio New Zealand the Government cannot afford the policy.
"This is pretty damning - the advice that has been provided by the Ministry of Health and they are in a very good position to tell us whether the minister's approach is going to work and the fact that this could potentially cost twice as much as it could save should cause the minister to reassess," said Ms Ardern.
- APNZBy Kate Shuttleworth @K8Shuttleworth Email Kate