Housing ministers have come under pressure from unions to increase funding for homelessness services, ahead of a national meeting.
State, territory and federal housing ministers in the portfolio will meet virtually on Friday, where progress on key policy areas will be discussed.
In a joint letter to ministers, the Australian Services Union, Homelessness Australia, the Australian Council of Social Service and others called for more funding to meet surging demand for homelessness services.
"Overwhelmed homelessness services across Australia are turning away 295 people per day because they don't have the resources to respond," the open letter says.
Ministers are set to discuss a new five-year national housing and homelessness agreement at the meeting.
The open letter called for an for an extra $450 million annually towards homelessness support to help meet growing demand fuelled by the housing crisis.
Signatories wanted a guarantee from ministers that $73 million for the sector would not be cut once funding arrangements under the national housing and homelessness agreement expired in June.
"When Australian families are at risk of losing their home, or are faced with a night on the streets, they expect homelessness services to be able to help," the letter says.
"The current reality is that resources are so stretched, families and children are ending up on the streets or sleeping in cars."
The open letter says homelessness funding needed to be indexed to keep up with rising inflation.
The government has provided states and territories $1.7 billion for a one-year extension of the national housing and homelessness agreement.
Among that was $67.5 million to boost homelessness funding following the release of census data in 2023.
Federal Housing Minister Julie Collins said the government had been working with states and territories on housing issues.
"The government is laser-focused on delivering more homes for more Australians," she said.
"I look forward to meeting with my state and territory counterparts to continue this vital work."
It's expected work on the $10 billion Housing Australia Future Fund is set to be discussed, as well as progress on the national housing accord.
Fresh forecasts from a home building industry body cast doubt over the government's target of building 1.2 million new homes over five years under the accord.
The Housing Industry Association said about one million would be built, leaving the government 200,000 homes short of its target.
Yet home building is set to start recovering in 2024-25 from recent decade lows, the HIA says.
Work on just 96,250 detached houses is tipped to start this financial year, before picking up to a still weak but improving 97,800 in 2024-25.
By 2026-27, the recovery is expected to be well under way and 110,000 homes are projected to be delivered.
HIA senior economist Tom Devitt said the government's 1.2 million home target was in reach but policy reforms were required.
"These reforms need to include lowering taxes on home building, easing pressures on construction costs, and decreasing land costs,” he said.
