Stable and affordable housing is an important instrument in the fight against poverty but there are problems of shortages in Australia. This paper considers the extent of these and proposes policy options to effectively bridge that gap. The focus of this paper is New South Wales (NSW), but reference is made to Commonwealth – State funding arrangements and some alternative policy approaches which are relevant across regions.  The importance of government support for social and affordable housing cannot be overstated. It forms a critical safety net for vulnerable families and individuals and helps reduce the risk of recurrent poverty. Housing distress is detrimental to people’s ability to earn, learn and contribute positively within their families and local communities and beyond. Shortages of social and affordable housing continue to widen. The social and affordable rental housing gap in NSW in 2019 is estimated to be about 216,500 units, and it is projected to rise by another 100,200 units by 2036.