Housing Minister Chris Bishop has held up his hands and admitted the Ministry of Housing and Urban Development (MHUD) failed to communicate effectively with Rotorua over its decision to extend the city's use of motels for emergency housing.

It comes amid a new Government initiative to prioritise families with children that have been in emergency housing for longer than 12 weeks which will see them moved to the front of the waitlist as a way to ensure the right people are moved through the housing system quicker.

Bishop said the housing situation was "a disgrace" under the previous Government.

"We inherited a situation where there are around 3000 families with kids in motels. The Government spends a million bucks a day housing people in motels," he told The Mike Hosking Breakfast this morning.

"We've got a target of significantly reducing the number of families living in emergency housing. It takes sustained effort - we'll need the private market operating properly, we need more social housing and we broadly need more houses across the spectrum."

Two weeks ago, residents in Rotorua told the NZ Herald they felt "blindsided and betrayed" by the Government after a bid was made to keep contracting 10 motels to house homeless people, despite an election promise to end this within two years.

MHUD said it was needed to allow more time to build houses.

Mike Hosking asked Bishop about this decision which had angered residents, to which the MP admitted the process hadn't been followed smoothly.

It was a "bit of a communication stuff up", he told Hosking.

"[Rotorua has] contracted motels, the numbers are coming down to be fair, there's more supply coming on and there's a cross-agency effort to get families out of motels ... what the ministry has done is apply for resource consents to just extend them for another couple of years, but they just didn't really tell anyone about it.

"It's frustrating. The community is pretty upset about it, unsurprisingly. We've got people there who want their town back and we're absolutely committed to getting families out of motels in Rotorua as quickly as possible."

The Government department blunder was raised with Prime Minister Christopher Luxon, who spoke with Newstalk ZB this morning on several political issues.

Luxon was asked how much of the communication problem came down to a public service that deliberately avoided following instructions from its Government versus departments that would be considered incompetent.

Luxon said the actions of MHUD reflected a culture of poor governance from the previous Government, which, he said, had no plan or direction.

"We have a responsibility as political leaders to make sure things are crystal clear at the centre, and that services are under no doubt what the direction of travel is and what the goals actually are," said Luxon.

"We've been communicating that pretty consistently over the last 150 days."

Luxon said in the absence of clarity, the Government's leaders end up with a public service that can be misguided and go off and do a bunch of things that don't matter most to Kiwis.

"It's a different way of approaching it, I appreciate that, it's a different way of working in the past, but we need to do it - we have to get the turnaround and results."

The deputy chairwoman of resident group Restore Rotorua, Carolyne Hall, has written to National MP Todd McClay and Rotorua Mayor Tania Tapsell requesting an urgent meeting after an MHUD official emailed her this week about its decision.

Hall told the Herald that, in her view, promises to end or improve emergency housing made during the 2022 council and 2023 general election campaigns had been forgotten and no one talked anymore about the Rotorua Housing Accord signed in 2022.

"That’s what I get so upset about is feeling so undermined by the political narrative," she said.

"We all walk past those motels and see the changing faces and the different cars and what’s been happening as a result.”