Prime Minister John Key says state houses could be offered to community housing groups at a discount price as part of Government's plan to sell off part of its housing stock.

The Government plans to transfer more of the responsibility for housing low income and vulnerable tenants by selling a portion of its housing stock to community providers such as churches, iwi and non-governmental organisations.

Mr Key said providers such as the Salvation Army might not have the money to provide more houses for needy tenants.

To help them increase their housing stock, the Government could sell them some of its 69,000 state houses at a cut price, he told TVNZ's Breakfast this morning.

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Asked about the cost to the public of selling houses for less than their value, Mr Key said taxpayers would be "better off over all".

Mr Key has been in damage control today after the Opposition seized on National's vague proposals for selling state houses.

His ministers have not specified many of the details including the total number of houses to be sold.

Mr Key gave a guarantee this morning that the total social housing stock owned jointly by Housing New Zealand and community providers would increase as a result of the Government's plan.

Housing New Zealand would sell houses in low-demand areas and look to increase the number of properties in high-demand areas.

Mr Key said if the Government wanted to provide 1000 new state houses it would cost $500 million.

But if it instead funded community groups to provide income-related rent subsidies, that would cost the Government around $12 million.

Income-related rent subsidies allow housing providers to charge tenants no more than 25 per cent of their income.

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Mr Key also said vulnerable tenants did not care whether their houses were owned by the Government or private providers.

"The question here isn't about whether the state owns them or whether a community group like Barnados owns them.

"The question is 'Are there more or less?' Because the person who is waiting in the queue, living in very poor conditions, doesn't care whether the Government owns it or whether the Salvation Army owns it."

His comments followed criticisms of the policy by Opposition groups and social housing providers.

Labour and New Zealand First said National was breaking its promise not to sell any more state assets after the partial sell-down of Genesis Energy.

They jumped on comments made by Social Housing Minister Paula Bennett on TV3's The Nation yesterday in which she said she did not think the sell-off was "that kind of big asset sale".

New Zealand First leader Winston Peters said there was no government plan to improve housing.

"The ministers' waffle and new jargon are simply a disguise for the real purpose. Cashing up state assets is still king, housing Kiwis has never been the real agenda."

Mr Key said it was not an asset sale because the Government was not selling off the housing corporation but was simply trading the houses it owned.

"Land Corp all the time buys and sells farms. Housing New Zealand buys and sells houses. So selling some of the houses that Housing New Zealand own to make sure that there are other houses provided is not an asset sale."