Construction of more than 500 houses for New Zealand's most needy families has been put on hold during a housing crisis because of a controversial Government policy change.

Most of the houses were likely to have been completed and tenanted by now if Community Housing Providers (CHPs) did not have their funding changed, the organisations say.

In some cases, the land had already been bought or secured but was now sitting bare.

"That means 500 whānau in motels and in transitional housing," said Monte Cecilia Housing Trust chief executive Bernie Smith.

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