Mrs Pritchard moved into the house with her late husband, who died in 2008, and two children who later married and moved out. Her son moved back in last year with his wife and two children, aged 6 and 4.
Mrs Pritchard needs dialysis three days a week. She said her two grandchildren often had coughs and runny noses.
"One or two days a week they are sick," she said. "Three days a week they are going to school."
She said the toilet overflowed on the day after the family moved in 18 years ago and she had to throw the carpet out because it was infected, but it was not replaced until last November.
Housing NZ supplied a gas heater, but she didn't use it because the gas smell spread through the house.
"We can't use that heater," she said. "I use four or five blankets in the winter and a hot [water] bottle."
National MP Alfred Ngaro, who chairs the committee, said many state houses had been in a poor condition since he worked in some of them as a young electrician, but the bill was finally doing something about it.
He hugged Mrs Pritchard, offered to help her and gave her his card.
Auckland Tenants Protection Association co-ordinator Angela Maynard told MPs the bill was "a small step towards regulating the condition of tenancies", but did not go far enough.
She said NZ should adopt rent controls and European-style laws requiring landlords to provide a "just cause" for evicting tenants. Current NZ law allows eviction on 90 days' notice without any reason being stated.
Property Investors Federation executive officer Andrew King said many families didn't make the best use of insulation because they couldn't afford to use heaters. He said the Government should fund vouchers to pay winter power bills for about 30,000 families with children with cold-related health conditions such as rheumatic fever.
He also advocated making tenants pay full water bills because it was difficult for landlords to pay the fixed charge and have to chase tenants to pay variable charges.
A Housing NZ spokesman said Mrs Pritchard had been a tenant since 2000.
"During this time, we have undertaken a number of routine maintenance and repair jobs to her home. In 2015, we partially replaced a floor in the bathroom and replaced the carpet in two of the bedrooms as part of our 'warm and dry' programme.
"No Housing NZ tenant should be living in a house that's cold and damp - we have been doing all we can to ensure that our homes are warm, safe and dry for our tenants. We will continue with our warm and dry programme as part of our ongoing work, and we actively encourage any tenant who has concerns to get in touch with us.
"We were not aware of the children living at the property - currently only Ms Pritchard and her son are declared as living at the property. We will visit Ms Pritchard tomorrow, following on from today's hearing, to find out more about her situation and to re-inspect the property."
