UPDATED 2.19PM: The testy exchanges are continuing between the Auckland Council and the government.

The council has held up approval for special housing area applications from the government, saying it needed more transport funding for the area before the applications were approved.

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The council's upped the ante suggesting another 45 special housing areas may be deferred - depending on the outcome of talks with the Government.

Yesterday, Deputy Mayor Penny Hulse said the local community has made it clear that the area is already heavily congested and not well serviced by public transport.

"We want the government to partner with Auckland to fund our transport needs appropriately starting with things like the north-west busway and improved rail to Kumeu Huapai," she said.

Building and Housing Minister Nick Smith has hit back, criticising the council's spending plans and ruling out any more cash.

"I'm a little bit concerned that in the council's latest budget it's actually pulling back on the amount of ratepayer money that they are putting into infrastructure."

"I do think they're pushing their luck a bit when they're pulling their own budget back but expecting the government to then fill that difference."

Smith's learnt of the development from the media something saying it's something he's surprised by.

"There's always going to be political argy-bargy and tension," he claims. "That's the nature of the way in which Auckland's going, with its housing, with its transport, with its schools and other needs."

Public Transport Users Association coordinator Jon Reeves says the council can't complain about a lack of infrastructure and not use what it has.

"There's actually stations ready to go. Auckland Transport's got spare diesel rail cars so the solution could get up and running tomorrow."

Reeves believes that existing residents are missing out.

Political commentator Richard Harman says it looks like the council is trying to force the Government into a corner, and is playing politics.

"The relationship between the government and the council is starting to break down."

"The council are obviously under huge pressure over its finances, they're looking for money anywhere it can get it."

"Len Brown is seen by the government as a political opponent, and they're quite happy to see him stew while these big issues like the special housing areas and the transport infrastructure swing in the wind."

New Zealand Building Industry Federation chief executive Bruce Khon agrees, and thinks there's too much politics involved.

"Historically the supercity was born from problems between the Auckland Regional Council as it was putting a ring around Auckland, preventing growth when it always wanted to get on with it, now you're dealing with legacy of that fight."

And Ratepayers’ Alliance spokesman Jo Holmes says suburban infrastructure has always been the responsibility of local councils.

"We all recognise that there is a real need to house people in Auckland, and we have this nonsensical situation with Len Brown playing hard ball. It's crazy."