Five agencies have agreed to take over working with thousands of clients affected after Relationships Aotearoa announced it will be closing its doors today.
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183 people will lose their jobs, and up to 7000 people will have to get counselling elsewhere after talks between the agency and the government broke down last night.
This afternoon officials announced that Barnardos, Family Works, Stand Children's Services and Lifeline will be taking over the counselling - plus a fifth agency they won't name yet.
It said those agencies would provide coverage across the country, even in remote areas.
The Ministry said it tried working with Relationships Aotearoa but negotiations broke down over a transition plan.
It said it was working with the agency to get its client database and contact details and all information will be handled in an ethical manner.
In the meantime it says Lifeline has set up a freephone number 0800 543 354 for affected clients.
60 locations to close by end of week
Relationships Aotearoa, the country's largest provider of counselling services, is likely to close its doors in 60 locations throughout the country by the end of the week, the agency says.
The organisation has said its funding from government agency contracts had fallen by $4.8 million since 2012, a drop of about 37 percent from $13.1m to a forecast $8.2m. It posted a $271,000 deficit for the year ended 30 June 2014.
Spokesperson Cary Hayward told Nine to Noon this morning that all the organisation needed to remain solvent was a six-week payment in advance and contracts rolled over.
"We would have been able to remain as an organisation so we were just wanting some surety around the contracts and some assurances that the playing field would remain the same for a period of time so that we could get re-establish ourselves financially."
Listen to Cary Hayward, Principal Strategic Adviser with Relationships Aotearoa, on Nine to Noon
Mr Hayward said the government was wanting a Rolls Royce service on a Morris Minor fee and it was just not sustainable.
Social Development Minister Anne Tolley told Checkpoint last week there were deep-seated problems in the financial management of Relationships Aotearoa.
She said for years, the agency had not been doing what the Government had been paying it to do.
"I don't think there's any evidence of misappropriation, but I do think the fact that they've had a pretty unstable chief executive role, four chief executives in a short period of time, I don't think that helps any organisation, specially when they're at a time of change."
Mrs Tolley said the Ministry of Justice changed its domestic violence service contracts in 2012 which resulted in Relationships Aotearoa losing millions of dollars.
She said such government department contract changes happened regularly, and although it was difficult for organisations, they had to learn to adjust and live within their budgets.
The taxpayer would not underwrite the organisation's deficits.
Lifeline chief surprised by outcome of talks
The head of one of the agencies which will take over Relationships Aotearoa clients said she was surprised to learn of the outcome of talks.
Lifeline chief executive Jo Denvir said that she only learnt today of the negotiation breakdown, but that the agency had been on stand-by.
She said at this stage she was unable to tell Relationships Aotearoa clients much about what happens next, except that everyone is working to make sure that there is a smooth transition.
Ms Denvir said Lifeline had trained and qualified councillors on its phone line all the time so it can work with callers.
She said she was unable to estimate how many new calls Lifeline could expect following the move.
Lifeline was planning to take on some of Relationships Aotearoa staff and the two agencies will be meeting on Thursday to talk about how they transition people safely from service to service.