Building more affordable housing is the only way to deal with a bottleneck leaving people stuck in crisis accommodation for years, says Homelessness Australia chair Jenny Smith.
The country is facing a "great challenge", she told the launch of National Homelessness Week in Hobart on Monday.
According to the most recent census data, about 116,000 people in Australia are homeless, a number that is rising.
"We know it's driven by rent rising in the private rental market - making it virtually impossible for someone on a very low income to secure housing," Ms Smith said.
In 2018, 288,000 people came to Homelessness Australia for services, an increase of four per cent on the year prior.
Ms Smith said people were staying in crisis accommodation for months and years because they couldn't afford to live in a house.
"Those in crisis beds end up living there for quite long periods of time because there isn't an exit point. There isn't a home for them to go to," she said.
"We have a bottleneck and there isn't a solution other than delivering more homes that people on our lowest incomes can afford.
"Just creating more crisis accommodation creates a bigger bottle with the same sized narrow neck."
Almost 190,000 people were on the nation's social housing waiting list, according to a 2018 report by the federal government.
Melbourne-based Launch Housing has urged governments to alleviate the problem by releasing unused land for housing projects.
The agency on Monday opened six of a planned 57 tiny homes to be built in the city's inner west on VicRoads land which has been leased to the Department of Health and Human Services for $1 per year.
"There's around 195 hectares of government land sitting empty across Melbourne, which could host more than enough homes to end rough sleeping," CEO Bevan Warner said.
Almost 25,000 people in Victoria are without a home on any given night and 1100 of them sleeping rough, he said.
Someone no longer on the streets is Deborah and her dog Zeus, who moved into one of the self-sufficient structures.
"I've been homeless since I was 13. For the first time in a long time I feel like I'm in a stable environment ... this place gives me hope," she said.
In Hobart more than 3300 people are waiting for social housing, a number that hasn't budged in a year.
"We are seeing an increase in demand," Danny Sutton, boss of Tasmanian support service Colony 47, said.
"Particularly by men struggling to access housing due to addiction and other associated health issues, women and family groups impacted by relationship breakdown and family violence."
Mayors from across the country met in July and have urged the Commonwealth to do more about the homelessness crisis.