Rotorua has been highlighted as a hot spot and is in the running for a slice of a multimillion-dollar Government scheme to keep the at-risk homeless population in housing.

The announcement has been praised by local advocacy groups, with one leader saying it would help make a "world of difference".

The $54 million fund aimed to tackle homelessness in the city, while funding a series of wraparound services to keep people off the streets.

People suffering from addiction, mental health needs and criminal histories were set to be provided the support needed to help hold on to their accommodation.

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