Around 180,000 homes will be eligible for grants to improve insulation and clean heating.
The home insulation funding was announced earlier this week but the government gave few details except to say the fund would be worth more than $300 million over the next four years for homes built before the year 2000.
On Thursday the Budget set aside $323 million to fit homes with insulation and clean heating. Around 180,000 homes will be eligible for grants of up to $1,800, and those with community services cards will be eligible for grants of up to $3,000.
Poorly insulated, mouldy and damp homes can lead to asthma and other respiratory problems.
The New Zealand Insulation Fund's goal is to see up to 60,500 homes being insulated each year by 2012/13.
"It's designed to reduce health risks from living in cold, damp homes and provide energy efficiency gains," says Energy and Resources Minister Gerry Brownlee says.
An Auckland budgeting service said earlier this week that fully subsidising home insulation would be the best option, but failing that the government should provide access to an interest-free loan or a means to add the loan onto a mortgage.
A report in November 2008 from the Business Council for Sustainable Development said insulation in more than a quarter of New Zealand's homes is not up to scratch.
Earlier this year National axed the previous government's Energywise Scheme - a $1 billion, 15-year scheme to insulate New Zealand homes.
During the election last year National called it reckless.
But the scheme was a Green Party initiative and a memorandum of understanding signed in April between National and the Greens put the issue of insulation back on the table.
Making the announcement the two parties said they would work in
harmony on issues like energy efficiency and rules governing herbal