"Those most affected by Auckland's housing crisis are our most vulnerable - people who end up sleeping in over-crowded garages, on people's couches and under bridges when they can't afford a rental."
She said housing people permanently was more cost effectjve than supporting them on the streets.
"Emergency visits, hospital stays, temporary shelter and going through the justice system all snowball into huge costs to New Zealand taxpayers," she said.
"Transitional housing and motel accommodation offers shelter for our most vulnerable, but it's not the answer to ending homelessness in New Zealand. Homeless people need permanent homes."
West Auckland's VisionWest Community Trust asked for extra help in June after running a successful pilot in Christchurch, where the Government has funded the agency to lease a 19-unit motel to house homeless families for up to eight weeks while social workers help them to find permanent accommodation.
At the end of June there were 941 Auckland households on the social housing waiting list in category A, described as "at risk and including households with a severe and persistent housing need that must be addressed immediately".
Data provided to Labour MP Carmel Sepuloni showed that 50 households on the waiting list nationally were living in cars and another 137 in garages.
A spokesman for Mrs Bennett said a request for proposals to provide the extra 120 emergency housing places in Auckland would be issued early next week with the aim of having the new places available by early next year.
The timing implies that agencies are most likely to respond by leasing existing accommodation such as motels, but the spokesman said the money could also be used for capital spending to upgrade or convert other properties.
"The Government is open to what the providers tell us they need," he said.
The short-term boost comes as the Ministry of Social Development is still reviewing longer-term funding for emergency housing. The ministry was due to report by May this year on current emergency housing provisions and by July this year with recommendations on long-term support for the sector.
Monte Cecilia Housing Trust director David Zussman said in June that 14 agencies currently provided emergency housing in Auckland, but mainly for 237 individuals in hostels such as the James Liston Hostel in Freemans Bay where Mrs Bennett made today's announcement.
He said there were only 35 units for homeless families, including 13 at Monte Cecilia.
The Government has already provided $500,000 in extra funding nationally in January.
That money was spread across 16 agencies in Northland, Auckland, Hamilton, Waitomo, Whakatane, Opotiki, Gisborne, Lower Hutt and Christchurch, and nationally through the Salvation Army.
Mrs Bennett's spokesman said the new $2 million would be only for Auckland because Mrs Bennett "acknowledges that Auckland is the area with the greatest demand for this kind of services".
Auckland Council has also allocated $250,000 a year for the next two years for the start-up costs of new emergency housing, including waiving regulatory costs and subsidising professional fees.
Mayor Len Brown welcomed the funding boost.
"It's good to see the Government recognises we have an emergency accommodation crisis and that more needs to be done," he said.
"Our current providers are at capacity and as a result way too many Aucklanders are sleeping rough or in cars. It's an intolerable situation and it's not good enough."
Mr Brown said Auckland Council recognised its regulatory costs were a barrier to providing new emergency housing places, hence its $500,000 injection to offset those costs for providers.
"We have worked closely with central Government on this issue for the past 18 months and together we are making good progress."
"Our strong commitment to emergency housing will continue and it is my expectation we will also make progress on moving the sector towards a much more sustainable funding model in the near future," he said.
