Social housing groups support the use of kitset homes, but say the government does not have a long-term plan to fix the housing crisis.
The government is in talks to build between 100 and 140 modular homes in three locations in South Auckland, with tenants moving in by Autumn next year.
Social Housing Minister Paula Bennett said the homes will consist of mostly one or two bedroom units, and be built on land earmarked for future development.
Ms Bennett said some of the homes would only be available for three to five years, but others up to 25 years.
Community Housing Aotearoa director Scott Figenshow said kitset homes should not be built without other funding and services in place.
The government's kitset plan was ad hoc and short term and much more effort should be put into a 10-year plan for housing, he said.
"It isn't just at least a warm dry home, there's got to be the support there and there's got to be the path that gets families back on their feet.
"There's no excuse for New Zealanders not living in a warm dry house, we're better than that.
"So where's the commitment to all New Zealanders being well housed, where is the access to the income supports and employment," Mr Figenshow said.
A housing service that supports low income families, the Monte Cecilia Housing Trust, said it was a welcome move.
Its chief executive Bernie Smith said he oversaw the use of modular housing in Queensland to help tackle homelessness.
"From experience, these homes would only last a short term, from 5-10 years, then they start to get quite shabby, so it really dependent on the materials that are used.
"They're cheaper to build, not only because they're factory-built, but also because cheaper materials are used to speed up construction and placement on site."
Mr Smith said the government should start thinking about how to replace the houses with permanent homes on the same land.
Moira Lawler, the head of the community service provider Lifewise, said it was a good idea to make use of land that was free now but not available long term.
However, she said it needed to be part of a bigger strategy, something the government did not have.
"If there's a housing strategy for Auckland, we're not aware of it.
"The government is working up different ideas."
She said a lot of research was still needed to understand what the best options were, and which ideas would best serve the different groups in need of housing.
"What a large Pacific family in a garage needs is different to what a young homeless person on K' Road needs.
"Without a strategy, we are kind of shooting in the dark."
Part of the modular housing plan needed to include support for the families who would be in it, Ms Lawler said.
"Many families who are currently homeless or in insecure housing also need wrap-around support, because they're not outside of our housing market by accident.
"They have debt, they have health issues, they have mental health issues, a range of issues that are complicating their lives."
Mrs Bennett said she planned to bring on board a community provider who would oversee the new homes under a special contract.
The Salvation Army said it had not been consulted on the government's plan, and did not know if it would take part, but in principle it supported any urgent response to put extra housing in place.
It's chief policy analyst, Alan Johnson, said he doubted the houses would be short-term as the government said.
"This idea of it being temporary housing needs to be seen for what it is, the crisis such as what we've got now isn't gonna go away anytime soon, and that housing can become semi-permanent or even permanent.
"It's important that we still have good urban design, that we still have good quality housing."
The government would need to make sure the developments were socially sustainable, and not become crime-ridden and unsafe for its tenants, Mr Johnson said.
"Housing New Zealand hasn't done that well in the past, partly because they say 'that's not our job', but the reality is these neighborhoods that are sometimes created in state housing areas aren't particularly attractive places to live because of the background levels of crime.
"Ideally we need to make certain that just doesn't take a foothold in these sorts of developments."
The Salvation Army would look at any offer put in front of it, but it was also working on its own housing plans, Mr Johnson said.