A scheme to give a $5000 grant to people who agree to leave Auckland and settle in the regions will be scrapped by the new Government.

Housing Minister Phil Twyford said the Auckland relocation grant was "just shifting the housing problem".

"It no longer makes sense to support families to move to areas where demand is already high.

"This initiative was a rushed and piecemeal response by the former government to the growing number of homeless in Auckland. National had failed to fund this grant beyond the end of the year and so instead of seeking new funding, the Government has decided to discontinue the grant."

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No new applicants will be taken from January 15 next year.

The initiative was introduced in June 2016 by then Social Housing Minister Paula Bennett, and covers the costs of moving, bond, or advance rental fees.

The relocation grant allows people on the waiting list for social housing in Auckland to move to regions where housing is readily available.

Bennett announced plans for the grant in January 2016, saying it could be used to free up social housing in Auckland.

As National came under pressure to address homeless issues in May, she confirmed that the grant would also be available to homeless people.