UPDATED 6.50am: The Government's rejecting assertions its new social housing legislation will allow it to sell off state houses en masse.

That's the accusation being levelled by the Labour Party after a Government bill allowing ministers to transfer state houses from Housing New Zealand ownership was tabled in Parliament yesterday.

LISTEN: Labour leader Andrew Little talks to Tim Dower on KPMG Early Edition about the Government's state housing plan.

Labour MP Phil Twyford claims the bill gives ministers extraordinary powers to sell off state houses.

"Government ministers are cutting themselves loose form the normal legal obligations that govern almost everything they do as ministers."

But Social Housing Minister Paula Bennett said the Government is quite restricted in what it can do with its mandate to sell.

"I just found his comments way out of line and completely, you know, quite histrionic to be honest," Bennett said.

"It's very, very specific in the legislation that it must be about implementing the social housing reform program and then it's very specific in that it sets out the objectives of that."

Meanwhile, the Opposition is questioning what the Government thinks an Australian state housing provider could do that we can't.

Labour Party leader Andrew Little says the idea of selling state houses to an Australian company makes no sense for the New Zealand taxpayer.

An Australian not-for-profit organisation, Horizons Housing, is looking at buying up to 400 state houses when they come on the market.

Labour leader Andrew Little has one question for the Finance Minister over this idea.

"What is it that he thinks they're going to do that actually New Zealand hasn't been doing or shouldn't be able to do for the last 80 years? I don't get it. I don't think there is anything in this for the New Zealand tax payer."

But Little acknowledges having a big property grab in a market where prices are rapidly escalating is a good proposition for the Australians.

"The New Zealand money, the rent money, the tax payer money - that goes to fund them and sustain them. That all goes to Australia," Little said.

"Why on earth would we be doing that? It just doesn't make sense, whatever way you look at it."