The Ministry of Social Development has admitted it cannot meet the current demand for social housing in Whangarei.
The Tai Tokerau Emergency Housing Trust has appealed for help, saying it had turning away seven families a week who were desperate for shelter.
And it said it was taking much longer to find homes for people since the ministry became involved in deciding who gets a state house.
The ministry said it would be happy to meet the trust and discuss its difficulties, but it said the demand for social housing in Whangarei was greatly outstripping supply.
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Deputy chief executive Marama Edwards said the city needed another 40 units.
"In Whangarei we've identified a need for an estimated 30 new one-bedroom places and 10 two-bedroom places.
"We will be looking to purchase those additional spaces from housing providers through income-related rent subsidies."
The ministry makes the point that it does not allocate state houses - that is the job of Housing New Zealand.
But what it does control is the Social Housing register - formerly known as the Housing NZ waiting list. And to get into a state house, you need to be prioritised by the ministry as being in the greatest need.
The trust said when Housing NZ handled the waiting list it was finding homes for people in emergency housing within eight weeks. These days, it said, it was more like three months.
But according to Ms Edwards that was because the register had grown by 30 percent in one year.
"As at December 2015 there were 134 people on the social housing register in Whangarei compared to 100 in December 2014. Increased demand will lead to rises in the average time for an applicant to accept an offer of housing."
The trust said there was no doubt more people were heading for Northland in the hope of finding a home - and finding themselves instead, living in cars or camping in someone's back yard.
But manager Ange Tepania said it was hard to see how people could be in greater need than, for instance, a grandmother with three grandsons under five crammed into a one-bedroom unit at the shelter for three months.
"They're getting anxious that they're getting towards the end of the time we usually allow people to stay with us.
"At the end of the day we're having to extend out tenancies for them, because we can't be adding to the problem of pushing them back out there with nowhere to go."
Ms Tepania said one family she knew of were so desperate they had paid a landowner $240 a week just to set up camp on his land.
Trust chair Adrian Whale said emergency housing was set up in Whangarei some years ago by Social Welfare, Housing New Zealand, church and community groups.
But he said with all the policy changes and restructurings of recent years the personal relationships that helped to make it work had been lost.
Mr Whale said the ministry's offer to come and talk to the trust was a very welcome move, and he was looking forward to hearing from them in the near future.
"We're all trying to help the same vulnerable people. So if we are talking together, that can only benefit the people we're trying to walk alongside."