Hundreds of millions of euro are lying unclaimed by homelessness charities, according to Labour TD Joanna Tuffy.

Focus Ireland has hit back at comment's by Labour TD Joanna Tuffy, which claim homelessness charities are not using up to €500m in loans made available by the Housing Finance Agency (HFA).

The charity says it is far cheaper to borrow from commercial sources.

"Ms Tuffy claims that Focus Ireland has not ‘drawn down’ millions of Euros from the Housing Finance Agency to help provide homes. She seems to fail to understand that the money she is talking about is actually loans," said Focus Ireland Director of Advocacy Mike Allen.

"The sad truth is that while Focus Ireland is in the process of borrowing millions of euro to build new homes, it is incredibly cheaper for us to borrow it from commercial banks than from the Government’s HFA fund - even in the middle of a housing crisis.

The Labour TD criticised a number of charities for not accessing the HFA fund, with the Sunday Times reporting that the HFA confirms just 5 out of 13 charities registered as approved housing bodies (AHB) have applied to it for funding.

The current homeless problem has been labeled as a 'national emergency' by Focus Ireland, but Tuffy has highlighted that the charity still hasn't sought funding from the HFA, despite qualifying as an applicant earlier this year.

The Peter McVerry Trust has not applied for AHB status.

"At the risk of agreeing with the Taoiseach, funding doesn't seem to be the problem - there is plenty of money around," said Barry O'Leary, chief executive of the HFA.

He says the organisation has €500m allocated to lend towards house building and house purchases. The money is provided by the European Investment Bank at a low interest rate of 3.25%, and the bank has said the figure could be topped up further if it is exhausted.

Focus Ireland have said they received a better offer from a commercial bank for a recent development in Harold's Cross, Dublin but that they will consider using HFA funds in future projects.

Chief executive of the Peter McVerry Trust Pat Doyle said he was disappointed with Tuffy's comments, as the organisation is attempting to meet the HFA's strict requirements for recognition, and is pursuing other means to receive money for housing purchases.

Chair of the Housing Finance Agency Michelle Norris explains what's going wrong: