The Maori Party has defended its backing for the sale of thousands of state houses, saying iwi will be able to take on the homes and do a better job than Housing New Zealand.

A bill which paves the way for National's sale of up to 8000 Housing New Zealand properties passed into law yesterday, with the support of Act, United Future and the Maori Party.

Opposition MPs attacked the Maori Party during the bill's third reading.

Green Party MP Marama Davidson said the Maori Party's argument that iwi could purchase some of the houses was not a good excuse.

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"That is the tiniest possibility," she said. "I will say that that is not enough ... justification for the Maori Party to support this legislation because we know that privatisation has never collectively benefited Maori."

Labour MP Carmel Sepuloni said she was shocked with the Maori Party's vote of support.

"That is on record now, and it will not be forgotten," she said.

Maori Party co-leader Marama Fox responded strongly.

"I come with some frustration at those who want to deride the name of the Maori Party because we dare to have an independent voice," she said.

"This is not a vote for a wholesale sell-off of the housing stock. For us, this is a vote of rangitiratanga."

Iwi had asked the Maori Party to back the bill so they could get into the social housing market, she said.

"Housing New Zealand has done an appalling job of looking after our people, and [iwi] believe they can do it better."

When Prime Minister John Key first announced the policy in his 2014 State of the Nation address, the Maori Party expressed some reservations, in particular around rights of first refusal for iwi.

The new legislation removes a requirement for Housing New Zealand to offer any land back to its original owner, but does not cut across right of first refusal for Maori.

The first tranche of sales are taking place in Tauranga, where local iwi have expressed an interest in buying up to 1000 homes.

The bill also gives Government ministers direct control over the sale of state houses, prompting Labour MP Phil Twyford to describe it as a "charter for corruption".

Social Housing Minister Paula Bennett and Finance Minister Bill English are now able to direct Housing New Zealand to sell specific properties.

Mrs Bennett said yesterday there were safeguards for these powers, including a requirement for public consultation. The powers could only be used for social housing purposes.

In the past, Housing New Zealand could be directed by Government policy, but it had ultimate power over which houses were sold.

Mrs Bennett said the Government was committed to selling between 1000 and 2000 houses this year, which are likely to go to churches, iwi, NGOs and charities.

"This bill will help enable the reforms that are needed to ensure more people who need housing support can access it, alongside social services that meet other needs," she said.

"We are making changes to ensure the social housing system is aspirational, not generational."