The Housing Minister acknowledges millionaires are able to buy a KiwiBuild home if they wish, but says he's not about to shut down the "bank of Mum and Dad".
Under the scheme designed to help those struggling to get into the housing market, there are income caps for first home buyers, but no asset means testing.
The ability of someone earning a low income but with hundreds of thousands of dollars in the bank, allowing them to purchase under the KiwiBuild scheme has been criticised by the National Party.
RNZ has reported three pre-approved buyers declared they could raise deposits of up to $650,000, saying they could get the money from parents or other family.
The Housing Ministry had released details of more than 500 pre-approved buyers, noting there could be input errors in the data, after RNZ went to the Ombudsman.
However the KiwiBuild Unit subsequently confirmed there was a group who had declared they could raise more than $300,000 for a deposit, including those who said they could stump up with $650,000, with six saying "they were planning to purchase with help from parents or other family".
The unit said none had yet purchased a KiwiBuild home and there would be further financial verification checks if it got to the point where they were looking to buy.
Mr Twyford today lashed out at RNZ over the story, accusing of it of "wilfully misrepresented this data" - referring to the original Official Information Act request.
However, the examples of the pre-approved applicants and their declarations about deposits over $300,000 used by RNZ were based on the information provided by the KiwiBuild Unit.
Mr Twyford was then asked whether New Zealanders would think it was fair someone with $1 million in the bank could buy a KiwiBuild house.
"We are not in the business of banning the bank of Mum and Dad ... it's as Kiwi as pavlova and anything else, that people should be able to mobilise family resources."
Under the last government, he said, there was a range of initiatives for first home buyers with no asset testing.
Mr Twyford was also asked how allowing wealthy New Zealanders to buy KiwiBuild homes fits with Labour's messaging over the years about "struggling" first-home buyers who could not afford to get into the housing market.
"KiwiBuild's not a welfare scheme", he said.
"It's about building more modest, affordable homes in the market, and doing everything we can to help first-home buyers get into the market."