Cutting funding to the tenant-in-situ scheme "beggars belief", Sinn Féin Spokesperson on Housing Eoin Ó Broin has said.
The scheme allows local authorities to buy properties where tenants are facing eviction because the landlord is selling.
However, there has been a sharp drop in homes purchased by local authorities through the scheme.
Figures supplied to Sinn Féin show that there was a 72% drop in homes purchased under the scheme in Dublin city last year.
Similarly, there was a decrease of 72% in Galway city, and an 86% drop in Westmeath.
Speaking on RTÉ’s Morning Ireland, Mr Ó Broin described the Government’s actions as "utter madness".
However, the Government is rejecting any suggestions that funding for the scheme has been inadequate. The Department of Housing said that €325m was allocated for the scheme but only €290m was spent.
"What the Government is doing is playing with the fact that local authorities recouped the money in arrears. In fact, almost all of the local authorities ran out of their funding last year by June, July or August," Mr Ó Broin said.
"The Government actually had to allow them to start processing 2026 applications in 2025 because of the funding shortfall.
"The figures that I've got from ten local authorities show cuts in the order of 70% to 96% on what was spent and what was bought the year before.
"It's reported that Government sources are saying that they're intending to cut the funding even further.
"Why a minister would cut funding for a successful homeless prevention scheme, not just once but twice - it beggars belief. In fact, in my view, it's utter madness," he said.
Mr Ó Broin accused the Government of being "out of touch" as homelessness figures rise.
"We saw a dramatic increase in the number of notices of termination or eviction notices issued by landlords in the last quarter for which information is available," he said.
"Local authorities need this funding. The idea that cutting funding for a vital homeless prevention scheme -one of the only successful homeless prevention schemes that's out there - at a time of rising homelessness is a good idea, simply shows how out of touch this Government is."
The Government has said that not all of the money allocated to the scheme was spent by local authorities, which Mr Ó Broin says misses the fact that the money was recouped by local authorities in arrears.
"It misses the fact that some of that money is recouped in arrears ... there's clearly an attempt by the department and the minister to deflect from a very simple reality," said Mr Ó Broin.
"Less funding was provided last year, less homes were bought, more people were made homeless.
"It makes no sense. And in the week where the Government passed legislation to allow rents to rise even further, it seems they are intent on driving homeless numbers, including for families and children, ever upwards," he added.
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