"Crowded motels are becoming hotbeds of dysfunction with families reportedly being forced to raise their children next door to gang members, drug-dealers and criminal activity.
"This is happening on the Government's watch and it must take responsibility for fixing it."
When questioned about this by National during Parliament's Question Time, Woods defended the Government's track record on homelessness.
"What we are is a party and a Government that is committed to finally owning up to the fact we have a homelessness problem in this country, that we have a housing crisis and that we are putting the actions into place."
Woods said homeless people were previously sleeping in cars, garages and on the street.
"I do not think motels are ideal, but I would put anyone up in a motel over them sleeping on the street any day of the week."
The Government has funded the provision of 6641 transitional housing places, which would triple what was available, she said.
She said National had refused to acknowledge that there was a homelessness problem when it was in power.
