The Government has diverted $52 million of funding meant to help Christchurch's housing problem to Auckland.

As part of the Christchurch Housing Accord, signed between the Government and the Christchurch City Council in September, the Crown agreed to invest $75m to construct 180 new homes on two council-owned sites in Sydenham.

The new Sydenham homes were expected to provide temporary accommodation for residents getting their earthquake-damaged homes fixed and would later be sold as affordable homes on the open market.

Treasury documents released to Christchurch East MP and Labour associate housing spokesperson Poto Williams this week show $52.2m of the $75m promised will instead be spent on housing in Auckland.

Williams said the re-allocation was outrageous and neglected Christchurch's dire housing issues.

"It's basically saying 'we think the Auckland situation is so bad, we need to focus on that and everyone else can shoulder the costs'."

Williams said she was disappointed at the lack of government transparency about the decision.

A spokeswoman for Housing Minister Nick Smith said the Sydenham housing developments had not required the full $75m as the competitive bidding process produced better value for money than the Government expected.

The Christchurch residential market had stabilised while housing supply and affordability in Auckland remained in serious trouble, she said.

"The Government does not want to over-invest in the residential market or discourage ongoing private sector investment [in Christchurch]," the spokeswoman said.

Christchurch Deputy Mayor Vicki Buck said she hated losing the money but the city council needed to work with the Government.

"One of our biggest challenges is in making sure the Government rent subsidy for social housing is available to all those in Christchurch who qualify. This will be a major ongoing annual cost to the Government and we are working very well with them at present to achieve that outcome "

Cr Glenn Livingstone, who is chair of the council's housing taskforce, said it was the first time he had heard that the money would go to Auckland.

City missioner Michael Gorman said diverting money to Auckland would make things harder for people living in Christchurch.

"It's terrible when cities have to compete for basic human rights," he said.

"I know the situation in Christchurch is appalling. The rents have verged on the immoral really."

Salvation Army social services secretary Michael Allwright said he was alarmed by the Government's decision.

"From a Salvation Army Christchurch perspective, it's very alarming. There is still a major need and major issue [with affordable housing]. The impact that will have on all agencies is significant."

Smith's spokeswoman said the housing accord projects were "well under way", with development agreements in place that would result in 400 new homes for Christchurch – the first of which would be completed later this year.