Four potential buyers have been chosen for the Government's sale of hundreds of state houses in Tauranga and Invercargill.

Accessible Properties, Hapori Connect and Kainga Community Housing Partners have been shortlisted to buy and manage one thousand 124 state houses in Tauranga.

LISTEN ABOVE: Social Housing Minister Paula Bennett joins Larry Williams

In Invercargill, Pact Group has been shortlisted to take on 348 state houses.

Social Housing Minister Paula Bennett said the Pact Group now gets to put its best offer forward, and it will be seen whether they can get to a negotiation that works.

"So at the end of the day we don't have to sell, it's as simple as that. We've had high barriers for them to get through to actually get to this stage".

The Government is now asking these community housing organisations to submit formal proposals to purchase and manage the state houses.

The Government plans to sell up to 8000 state houses to charities, iwi and non-government providers.