Housing New Zealand will now let meth users stay in state homes - and try to find them help.
The government is investigating the eviction of state house tenants after a study found there was no health risk from the traces of methamphetamine found in their homes.
Housing Minister Phil Twyford said Housing New Zealand is a landlord for some of the most vulnerable people in the country.
He said if the agency discovers a tenant is smoking meth, it will try to help them.
Mr Twyford said the government is not ruling compensation out at this stage but will be making decisions based on individual cases.
He said the response from Housing NZ now was to treat people using meth as a health issue.
"Under the old government the policy was to make that person homeless - the worst possible thing that you could do.
"If someone's got a drug addiction problem, you couldn't do anything more calculated than to make them vulnerable to greater risk in their health, and in fact incurring greater expense to the taxpayer than throwing them out of their home and making them homeless.
"Housing New Zealand is a landlord ... they're not the police."
Mr Twyford said Housing NZ will no longer throw people out onto the streets if they're found to be using meth.
"Under my direction, Housing New Zealand has taken a more compassionate and tenant centred approach.
"The last government was absolutely obsessed with putting people through tenancy reviews - including old people, people with disabilities and families with young children and throwing them out on the street because they committed the crime of earning just enough to have to pay a market rent under Housing NZ's rent criteria," he said.
"We don't believe that was doing anybody any favours - the benefit people get from public housing is security of tenure."