State housing tenants and homeless in Auckland will be given up to $5000 to move to the regions.
Paula Bennett floated the idea in January and has now confirmed the offer which covers relocation costs.
There are more than 2000 people on the waiting list for urgent state housing in Auckland.
Mrs Bennett said there were dozens of empty houses in other parts of New Zealand, such as in Lower Hutt where there were 18 state houses ready to let, Palmerston North where there were 15 and Gisborne with four.
"We are putting up a $5000 grant for people who are eligible and want to move out of Auckland.
"I understand some people have kids in school and need to be in Auckland so I'm not talking about them. But for others we're just opening up the choice and it's voluntary."
Ms Bennett said she had been working on the idea for quite some time, but had thought to include homeless people in the past few days.
She said the government would also help state housing tenants move to the regions to live in private rentals, where they would be eligible for the accommodation supplement.
The initiative is estimated to cost $750,000 to move about 150 families from Auckland.
Ministers allowed flexibility - Bill English
Finance Minister, and Minister Responsible for Housing New Zealand, Bill English, said he was not aware of the announcement encouraging people to move into empty state houses, until he was informed by media.
But Mr English said other ministers were free to spend money within their own portfolios, without always running it past him.
"I'm not responsible for every single dollar, you know ministers have their budgets and they work with them.
"With the social housing, because we're trying to get more focused on individual households and tenants, there's quite a lot more flexibility in how they use the Budget, I mean the general idea is that they try and find the cheaper, most effective solution."
Mr English said questions about why he did not know about Ms Bennett's announcement showed a "misunderstanding of how the system now works".
He said there was a lot more flexibility.
"And a lot more focus on small groups of tenants and individual tenants and where MSD (Ministry for Social Development) can help individual families or people in difficult circumstances, where their story's true, because the stories we get are of variable complexity, where they can help they've got the capacity to make decisions individually about them."
Labour Party leader Andrew Little said the policy was a desperate attempt to respond to recent publicity.
"This is policy on the hoof, from a government that's been out of touch on this issue for far too long. Bill English didn't even know about his colleague's announcement."
"Having let the housing crisis spiral out of control, the government's three housing ministers are now in damage control mode as the consequences of their failures come home to roost."
New Plymouth Mayor Andrew Judd said the government was dangling carrots in front of the most vulnerable people with the offer and described the idea as appalling.
Mr Judd said it showed a complete lack of planning or long-term strategy.
He told Checkpoint those people will move with no family or support and then the money they've been given will run out.