"I have seen cars been broken into while people are sleeping in them. We need some where safe for us 'car people', a block of land where we can sleep and be safe over night, there just aren't houses for us," he told the group.
Mayor Steve Chadwick said she saw it as a community issue and was hoping the council could work with the community to solve the problem.
Rotorua Labour Electorate Committee chairman Haydn Marriner said the problem started years ago.
"Two years ago we had a homeless problem, if we don't deal with it now it's going to be five years before we do something. The problem is only going to get bigger."
Mr Twyford said the issue started in Auckland, but it did not end there, the issue had moved into the regions and was only going to get worse.
He said he had made a call to the government to announce New Zealand was in a state of crisis when it came to homelessness.
"A decade ago a single wage earner could save enough to pay off a home. How far have we come? 42,000 people in New Zealand are currently homeless.
"The government needs to find a way of working with the community to solve this issue."
Earlier, Mr Twyford had been in Tauranga taking part in the Cross-Party Homelessness Inquiry.