But the government says it is working hard to address homelessness across the state and it has a strong pipeline of construction which will see hundreds of new social homes come online in the next 18 months.

Shelter Tasmania chief executive Pattie Chugg said the report, released on Thursday, highlighted many low-income Tasmanians in the private market were doing it tough with over 40 per cent in ongoing housing stress.

"Tasmanian incomes are failing to keep pace with soaring rental prices, and even households on moderate incomes are paying over 30 per cent of their income in rent," Ms Chugg said.

"With Hobart now the least afforded capital city in Australia for renters, we are now seeing the impact of rising rents in Launceston and the North-West affecting more and more households."

READ MORE: Repeat periods of homelessness worst in Tasmania

The report found Tasmania had the highest proportion of people suffering repeat periods of homelessness.

"The lack of affordable and safe housing is the biggest cause of homelessness," Ms Chugg said.

"The report shows each day 31 people requesting assistance form homelessness services could not be assisted, up from 27 last year.

"The housing crisis in Tasmania is starkly revealed when you compare that in Tasmania 54 per cent of clients list housing as their reason for seeking help from a homelessness service but nationally the number is 37 per cent."

Ms Chugg noted it was positive there had been growth in the community housing sector, an increase of 718 homes, but urged the government to continue this as a priority.

Tasmanian Council of Social Service spokeswoman Simone Zell said until the state's housing system was reset the same or worse outcomes would continue.

"Providing essential services to Tasmanians that improve outcomes is about more than continuing to add dollars to budgets," Ms Zell said.

Labor housing spokeswoman Alison Standen said the government needed to do more to stop the revolving door of homelessness for vulnerable Tasmanians.

"Nearly 8 per cent of Tasmanians who need to use homelessness services are not able to be settled in a secure home, and are homeless again within a year," Ms Standen said.

"The report noted that 23 per cent of people needing homelessness accommodation services in Tasmania do not receive them."

Clark Independent MHR Andrew Wilkie said the report showed how unresponsive and insensitive the state government was to the housing crisis gripping Tasmania.

"The report shows the Tasmanian government had cut funding to social and public housing [at] the height of the homelessness crisis, at a time when the Hobart Showgrounds was home to numerous people being forced to live in tents," Mr Wilkie said.

"This is actually a core state responsibility and the new Premier, Peter Gutwein, must act immediately to provide adequate housing and homelessness services to society's most vulnerable."

A Department of Communities spokesperson said the government was progressing its work in the area of reducing homelessness and housing stress with an additional $5 million in funding allocated this financial year.

"The new funding is being used to expand emergency and short-term accommodation across the state to bridge the gap in demand while longer-term options come online under our Affordable Housing Strategy and Action Plan," the spokesperson said.

"Through Action Plan 2, the government will continue to update and progress key projects that support Tasmanians in need including working with Magnolia House to expand their shelter in Launceston and building a new youth risk centre in the North [and] investing in new homelessness accommodation for men and working with YFCC to replace their site for homeless youth in the North-West."