There are fewer people sleeping on the streets but the overall number of homeless Australians has risen, a new report says.
The number of rough sleepers in Australia has fallen by six per cent since 2006, says the COAG Reform Council's latest report on the National Affordable Housing Agreement (NAHA), released on Wednesday.
However, overall homelessness increased by 17 per cent, which means the Council of Australian Governments is unlikely to meet its benchmark to reduce homelessness.
It had pledged to lower it by seven per cent by the end of this year.
But COAG Reform Council Chairman John Brumby said the 2011 census data showed good progress in tackling the most severe form of homelessness.
"Rough sleeping is what most people think of as homelessness," Mr Brumby said in a statement.
"They are some of the most disadvantaged Australians, those who sleep without a proper bed or shelter, so any fall in the number is welcomed."
The census showed a drop from 7247 in 2006 to 6813.
But the NAHA deals with long-term housing, meaning that those living in temporary accommodation are also considered to be homeless.
Mr Brumby said the overall rise in homelessness, while disappointing, could be attributed to increasingly severe crowding and temporary accommodation.
In 2011, 41,390 people were living in severely crowded accommodation, almost 10,000 more people than in the previous census.
Most of them live in major cities, and two thirds have been born overseas and are likely to be recent migrants.
The report also showed that indigenous people continue to be over-represented among the homeless, making up more than one quarter of the total homeless population in Australia.
Homelessness NSW CEO Gary Moore says a key concern is that an estimated 5000 to 8000 asylum seekers will be released into communities over the next 12 months with little long-term support.
"Without serious housing and resettlement assistance, including being able to work, a new underclass of people fleeing violence overseas will be living very poor lives in this global city," he said in a statement.
Mr Moore said many would end up swelling the numbers of homeless in severely overcrowded housing, especially in pockets across western Sydney.
"Their numbers will now increase up to fourfold. Charity and luck can no longer be the safety net."
He says it is time for the federal and NSW governments to work together and redouble efforts to reduce and prevent homelessness.