Housing New Zealand is expecting to pay the Crown a dividend of $118 million this financial year, the largest in five years.

Opposition politicians have been urging the Government to take a smaller dividend from the agency that manages State houses, after reports of cold and mouldy houses.

Housing New Zealand returned a $108 million dividend in the past financial year, the third largest ever paid.

At the time the responsible minister, Bill English said the higher dividend would allow the Government to help more people with serious housing needs.

Green Party co-leader James Shaw said the idea the Government was continuing to make money off State housing when children were getting sick from living in those houses was unacceptable.

He said the Crown must rule out taking a dividend until all Housing New Zealand stock was up to standard.

"Given that Housing New Zealand homes are actually killing their residents, I think it makes no sense for there to be any dividend at all.

"Everything that they get should be ploughed back into making sure that their homes are safe."

But Mr English said defended the dividend.

"Housing New Zealand has sufficient cash to invest in new houses and at the level that we've specified, and to do its maintenance programmes," he said.

"So really the dividend is about just a bit of pressure on them to be efficient."