Vulnerable families were placed in the same motel as a serial sex offender, according to a report.
That was despite a social worker knowing that the sex offender was in the motel, Stuff reported.
Ronald Jeffries, 66, was living in the United Motel in Palmerston North while under an extended supervision order which related to a decade of sexual offending.
He told a case manager at the Ministry of Social Development that he was in the motel when he applied for a Housing New Zealand property in May.
Stuff reported that the case manager did not question the placement because it was a Corrections decision, and failed to notify anyone else at the ministry.
In all, 13 families with 33 children were placed at the same motel before Jeffries was taken into custody in July for allegedly breaching his supervision order.
That raised concerns that Jeffries had abused some of the children, though a police investigation found no evidence of this.
Corrections Deputy National Commissioner Andy Milne confirmed that it had reviewed the case but he could not comment in detail because Jeffries was back before the courts.
He said the department had recently strengthened its information-sharing processes with MSD to avoid similar cases. It had also strengthened the approval process for using motels as emergency accommodation for offenders.
"The use of motels as emergency accommodation has previously been approved for a very small number of offenders as a last resort, where no other suitable options can be secured," Milne said.
He added: "Specific consideration must be given to whether children or vulnerable adults could be present at the motel at any time during the offender's time there, and there must be a plan in place to mitigate any potential resulting risk."
There are 225 people around the country who are subject to extended supervision orders.
Around 15,000 people were released from prison last year, and Milne said there were "extreme difficulties" finding a home for "a very small number" of them because of community opposition.
"Even when supported living and supervisory arrangements are put in place, the level of animosity directed toward the offender, Corrections staff, landlords and reintegration support providers make the placement unsustainable for safety reasons."
MSD has increasingly depended on motels for temporary accommodation because of a chronic housing shortage.
A report last week showed 14,017 emergency housing grants were given out in the last three months, up from 9245 in the previous quarter. The grant covers the cost of short-term accommodation, which is usually a motel.