The Salvation Army says it is punitive for the Social Housing Minister to warn that state tenants who refuse to accept a house offered to them without good reason might be dropped to the bottom of the waiting list.
Paula Bennett told delegates at the National Party's annual conference her staff often dealt with people who declined houses without sufficient reason.
Ms Bennett yesterday told delegates that between November 2013 and last October, 4155 offers of a state house were declined.
She said some people had a good reason for refusing a house but many did not.
"Often we are having people that are declining houses without good and sufficient reason, and if that is the case then I don't think they should stay ahead of others on the list. And we should, there should actually be some repercussions for that."
She said if the waiting list was small that might not matter, but at any one time 4500 were waiting for a house.
But Salvation Army social services director Major Campbell Roberts said if people were declining housing in the manner suggested there were better ways to resolve the situation.
Mr Roberts said Housing New Zealand could demonstrate better management to fix the issue.
But he said he did not feel there was sufficient evidence that there were waves of people turning down housing that would be perfect for them.
Policy an attack on the poor, says Labour
The Labour Party has accused the Minister of Social Housing of attacking the poor over a move to bump people down the state house waiting list.
Labour Social Development spokesperson Carmel Sepuloni said the policy was a distraction measure and a tool to attack vulnerable people.
Ms Sepuloni said the stance was unacceptable and it was ridiculous it was even getting discussed at the conference.
She said people turned down houses for a variety of reasons.
"We have a lot of people coming through our office who have inappropriate Housing New Zealand houses that are offered to them.
"People turn down Housing New Zealand houses because of the fact that they're not within a close enough distance of their kid's schools, their kid's early childhood centres, perhaps it's that they're not within close enough distance of family support."
Ms Sepuloni said there had been instances where people had turned down houses because they were badly maintained or were too close to abusive ex-partners.