The head of the Ministry of Housing and Urban Development's KiwiBuild unit Stephen Barclay has resigned with immediate effect in the midst of an employment dispute.

His resignation was announced in a one-line statement from a PR company this afternoon.

Barclay, who began in the role only in May last year, had not been working in the position since early November, a spokeswoman told the Herald.

"This was not his decision," she said in written responses to questions.

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The spokeswoman said the employment process was ongoing but Barclay had made the decision to resign of his own accord so he could move forward with his career.

"He believes this was in the best interests of both himself and the KiwiBuild programme," she said.

She would not be drawn on the nature of the employment dispute.

Ministry of Housing and Urban Development chief executive Andrew Crisp said he received a letter from Barclay about 12.30pm today stating he had resigned as head of KiwiBuild with immediate effect.

"I am considering how this affects the employment process currently underway," Crisp said in a statement.

Housing Minister Phil Twyford declined to comment today because it was an employment issue.

The Weekend Herald revealed late last year that Barclay had not been working in his role since November because of an employment matter.

National's Housing spokeswoman Judith Collins said Barclay's resignation did not bode well for KiwiBuild.

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"This is extraordinary and needs a full explanation from Mr Twyford, and whether it was due to a relationship breakdown."

Act leader David Seymour said Barclay's resignation had thrown the KiwiBuild programme into crisis.

"Phil Twyford can't even manage his own department – how can we expect him to plan and build 100,000 new houses?

KiwiBuild is one of the Government's flagship programmes and aims to build 100,000 homes across in New Zealand over the next 10 years.

Twyford announced in October that he had opened the new ministry which would "help the Government build New Zealand out of the national housing crisis and restore the basic rights to healthy, affordable housing for all New Zealanders".

The new ministry united a range of previously fragmented housing policy, funding and regulatory functions from MBIE, Twyford said at the time.