Wellington's City Missioner says there is unprecedented demand for its emergency and transitional housing right now.
Wellington missioner Murray Edridge said on the ground the situation was dire.
"We're very full in our services, and we've got a cohort of people that are harder off than they've ever been.
"Our staff are stretched, it's not a disaster yet but we're doing the best we can in what are really difficult circumstances."
The Associate Housing Minister Marama Davidson said the latest six-monthly progress report on the government's plan to tackle homelessness shows milestones being met.
Davidson said she was particularly proud that the government has found 2200 places where people who are at risk of losing their tenancies can live long-term.
She said $6 million has been given to local initiatives with a strong focus on Māori, Pasifika and rangatahi who may be homeless or at risk of homelessness.
There were also pilot programmes in Auckland and Waikato to support people leaving acute mental health and addiction units.
Edridge acknowledged the government's efforts but said it was still going tough for many.
Edridge said the housing shortage and increased cost of living was making life more of a struggle for some than even a few weeks ago.
The National Party, however, said the report was just spin.
Spokesperson for housing Chris Bishop said the Government was trying to claim progress on homelessness by making sure the reports focused on the amount of money spent and the number of programmes started - not the actual outcomes.
He said homelessness has increased in the past five years.