Public housing tenants in New South Wales with spare bedrooms are about to recieve a letter in the mail asking them to move, or pay higher rent.
The controversial bed tax is part of a state government plan to move 500 people a year into smaller accommodation.
The government says the tax will free up some of the 17,000 public housing properties with three or more rooms that are occupied by singles or couples.
Pensioners who refuse to move out of public housing to make way for families will be charged higher rent to stay.
Singles will pay an extra $20 each week and couples $30 per week if they refuse to find what the government has dubbed "more suitable" accommodation.
The government says the new vacant bedroom charge is necessary to provide housing access to more needy families.
Opposition spokeswoman for housing Sophie Cotsis says the new policy would lead to homelessness.
"This O'Farrell government does not have a Minister for Housing. They have cut $22 million from the supply budget."
In the UK a similar policy has led to chaos. After two months of this policy being introduced, tenants have fallen into arrears, facing eviction.
British Prime Minister David Cameron was accused of acting like the greedy Sheriff of Nottingham after he introduced a similar policy.
"I can see that this penalty is already causing harm," UN special rapporteur on housing, Raquel Rolnik says.
Housing NSW will target areas including Liverpool, Shellharbour and Mount Druitt, where there are high numbers of tenants living in larger homes with unused bedrooms and large numbers of families on the public housing waiting list.
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