Government ministers will be given a lump sum of $37,500 a year to pay for accommodation in Wellington - and will be able to pocket any of the taxpayer money they don't spend.

The possibility of a payout will be some solace to ministers who are averaging $48,295 in accommodation costs under the present system, in which officials take care of everything.

Prime Minister John Key outlined the new system yesterday, acknowledging there had been "robust debate" in Cabinet from the affected ministers, who will have to look after themselves on $721 a week.

If they can keep their Wellington accommodation costs cheaper than that, they keep the difference.

"They get their $37,500. They can do what they want with it. They've just got to look after themselves," said Mr Key.

He believed the new system would give MPs who became ministers an incentive to stay in their existing accommodation, instead of upgrading to better homes.

"They get a bit more and they stay in the current conditions they're in."

Mr Key said the $37,500-a-year allowance could be used for only one property, because "I don't want four ministers living in one house and each of them claiming $37,500".

Many ministers would be losing up to $10,000 a year, he said, but "my view is they can make do with less".

The review was prompted by controversy last month about ministerial housing.

Finance Minister Bill English was found to be claiming almost $1000 a week for expenses to live in his own Wellington home, and other ministers had moved to better residences and were renting their own properties to fellow MPs.

Mr Key's new system will have a category for ministers like Mr English who will be able to claim $30,000 if they stay in their own home.

The Prime Minister said he expected the change to save "hundreds of thousands" of taxpayer dollars.

The review said $1,484,000 would be saved, but Mr Key's estimate was less because he did not agree with plans to sell all seven Government-owned ministerial houses other than his official residence, Premier House.

He said more time would be taken to consider this.