Wellington Mayor Justin Lester has welcomed the Government's move to spend more on social housing, and a programme aimed at helping the long-term homeless.

Budget 2018 has allocated an additional $1 billion for housing, including $369 million in capital funding. It means an additional 6400 state houses over four years – or 1600 a year.

Funding has also been made available for insulation grants for low income owner-occupied homes. An extra $142.5m is available for insulation.

Wellington City Council wants 750 affordable and social homes built in the capital over the next 10 years and has budgeted $27.5m to assist that.

"The Government has recognised there is a need for more housing for those less well-off, and help for those who struggle to find homes," Lester said.

"Any money they spend in those areas will complement and boost our own efforts."

Wellington is among the centres where an additional 550 places will be made available in the Housing First programme, which aims to house and support the long-term homeless.

It has been piloted in Auckland and Hamilton, and will now expand to Wellington, Tauranga and Christchurch.

The council is planning, with government agencies, to set up Te Whare Okioki, the country's first home for homeless people who suffer from chronic addictions.

"It's fantastic that Housing First will come to Wellington, and there will be more support for the homeless," Lester said.

He also welcomed the $50m for metro rail projects in Wellington. The money is "catch up" investment which will enable sustainable operation of the network.

"Thousands of Wellingtonians rely on trains to get to work and to get around the region. Having a reliable train service is absolutely crucial to the health of the capital," he said.