Housing and Urban Development minister Phil Twyford said it was working with providers on that.
''The ministry is working with community providers and the housing sector to increase and diversify the supply of public housing and provide the supports people need to build more independent lives.''
There were 58 transitional housing places available in the Rotorua district, providing support for up to 232 households per year, he said.
Rotorua MP Todd McClay said he would continue to advocate for the transitional houses as they would play an important part in helping people who were finding it difficult in the rental market.
''There are often a number of reasons why assistance is needed and transitional housing providers help with budgeting, saving a bond, poor rental histories and searching for appropriate accommodation.''
Meanwhile figures from the Ministry of Social Development show in the last year alone it granted 986 applications (which could include multiple applications from the same person) worth $889,000 for temporary housing accommodation while a longer-term option was sought.
It had also paid another $510,000 to three providers who provide transitional housing support in Rotorua for motel accommodation and standalone homes.
The ministry's housing deputy chief executive, Scott Gallacher, said finding the right property in the right place was not always easy, especially for those on fixed incomes who may not be able to access other long-term housing options.
''Part of our role is to help eligible households with their immediate housing need, so we can then help them look for a suitable home long term. Ultimately, we want to ensure those with an urgent housing need have somewhere to stay immediately.
''Where transitional housing places are fully subscribed we can help to meet the cost of short-term accommodation through payment of a Special Needs Grant. ''
The Salvation Army in Rotorua has been a transitional housing provider since May and has one one-bedroom unit and four three-bedroom houses.
Lieutenant Kylie Overbye said the rental housing crisis was a growing concern as demand for accommodation increased.
It had housed 12 families so far as people were forced to live in cars, motels, campsites, caravans, overcrowded in others' homes and in garages.
Poverty often played a major part and those with a bad tenancy record were hardest hit, she said.
''When rents go up or there are fewer houses and those on the lowest incomes are hit the hardest from being unable to afford the increase.
''We want to help people in some way get better control over their circumstances, and for us providing transitional housing is one way we can help. These houses can give a little respite to allow people a bit of time to work through whatever challenges they may be facing.''
LinkPeople Rotorua chief executive Christine Hall said it started providing housing support through the ministry five months ago.
"Having a home is a basic human right, not a reward.''
It had helped 62 families with children who had primarily been living in motels into houses and was working closely with another 38 families.
Poverty, debt, family relationship breakdowns, disputes and overcrowding were contributors to homelessness in the city, Hall said.
"So far, most of the homes we've found for people have been in the private rental market.''
There were many benefits working with a registered community housing provider such as guaranteed rent, no property management fees and no commission, she said.
A Housing New Zealand spokesman said it owned 647 properties in the Rotorua Territorial Local Authority. On September 30 this year 16 of those properties were vacant.
