Prime Minister John Key has been accused of being disconnected from average New Zealanders after saying that beneficiaries who resort to food banks do so out of their own "poor choices".

Mr Key made the comment when asked in Parliament yesterday about poverty levels.

When Labour's social development spokeswoman Annette King asked about Salvation Army reports of high demand for food parcels, Mr Key responded by saying it was true that the global recession meant more people were on benefits.

"But it is also true that anyone on a benefit actually has a lifestyle choice. If one budgets properly, one can pay one's bills.

"And that is true because the bulk of New Zealanders on a benefit do actually pay for food, their rent and other things. Now some make poor choices and they don't have money left."

Ms King had asked Mr Key how his claim that most New Zealanders were better off from the tax cuts package tallied with reports such as that of the Salvation Army, which claimed "food poverty" was at nearly double the level of four years ago.

The Coalition to End Homelessness, which is made up of a number of social agencies including the Salvation Army and Lifewise, said Mr Key's comments were outrageous.

Co-chairman Corie Haddock said for most people in poverty it was a case of a lack of options not choice.

"I find it absolutely astounding actually, he's either getting really bad advice from people or he is completely disconnected from the average New Zealander who is really suffering," Mr Haddock said.

"What's happening with those people is the risk of homelessness increases quite significantly. Poverty can be another pathway into homelessness."

Based on his experience assisting people with budgets at an Auckland homeless service, Mr Haddock said Mr Key's comments about budgeting properly were wrong.

"By the time they pay their rent, their power and their phone, they have $24 a week for food and entertainment, and you can't live on that."

Mr Haddock said not enough was being done to address the issue of poverty in New Zealand, and that a national strategy was needed.

Sue Bradford, who heads the Alternative Welfare Working Group yesterday said Mr Key clearly had no comprehension of the reality of living on a benefit.

While some did get by on the benefit alone, the circumstances of different beneficiaries varied widely. She said many did not waste any money but struggled to pay their rent, feed and clothe their families and send them to school.

An Auckland beneficiary leader last night challenged Mr Key to live for a month on the single adult dole of $194 a week.

"I'd like Mr Key to spend a month on the benefit and see how wonderful he thinks it is, considering it's a 'lifestyle choice'," said Helen Capel, an invalid beneficiary who speaks on benefit issues for the Auckland Council of Social Services.

"The cost of living is too high now and you cannot live on $194 a week even with the maximum accommodation supplement," she said.

- With NZPA

Current benefit rates (after tax), plus temporary GST assistance until April 1, 2011:

* Unemployment & sickness benefits: $194.12, plus $3.92.
* Domestic Purposes Benefit (one child): $278.04, plus $5.62.
* Invalids' Benefit: $242.63, plus $4.90.
* Pension (single): $327.14, plus $6.61.

May also qualify for allowances: accommodation supplement (max of $225), childcare, allowance, disability allowances ($58.13).