Labor defends its homelessness scheme

Federal Labor has defended its social housing scheme amid reports a major Sydney development tapped $80 million in taxpayer subsidies to help build units for wealthy foreign students.

The $4.5 billion National Rental Affordability Scheme, initiated by the Rudd government in a bid to reduce homelessness, was meant to help low-income Australian households.

However, prospective investors in the Central Park development in central Sydney were told about its "NRAS advantage", The Australian newspaper reported on Tuesday.

It means investors can get an incentive or tax offset from the government totalling $10,000 a year, or $191 a week guaranteed for 10 years.

Material promoting the $2 billion project makes it clear that international students will be the main tenant group for the 823-bed facility.

Deputy opposition leader Tanya Plibersek, who was housing minister when the scheme was launched, insists the vast majority of people who live in NRAS properties are on very low incomes.

"It's a very well-designed scheme, meeting its objectives," she told reporters in Perth.

Ms Plibersek said she would like to see Prime Minister Tony Abbott commit to the scheme and not include it in spending cuts.

Mr Abbott was scathing of Labor's handling of the scheme, saying it was typical of the party's incompetence in government.

"This is just another example of how hopeless they were," he told reporters in Perth.

Commonwealth funding for homelessness projects is due to expire at the end of June and the states are pressing the Abbott government to commit beyond that time.