The top-up payments, which assist private renters on welfare support to meet the shortfall in their rent, are being cut due to budgetary pressures.
The Northern Ireland Housing Executive (NIHE) has written to impacted households advising that anyone who has received DHP for over two years will be stripped of their entitlement.
Said the Foyle MLA: “At a time when many people are already struggling to pay their rent and make ends meet this news will come as a devastating blow for those in receipt of these payments.
“While those impacted can appeal the decision, it will be a case of determining which households are deemed most vulnerable among an already vulnerable cohort.
“This is an outrageously shortsighted decision given that loss of rental accommodation accounts for one of the primary causes of homelessness in Northern Ireland.
“Discretionary Housing Payments provide a lifeline to many, helping to sustain tenancies for longer and prevent homelessness.
“This provision has become even more vital in the context of the costs crisis; rents are steadily on the rise and the support which is available falls short.
“Essentially, the removal of this already sub-par support from households, many of whom are already on the breadline, will push struggling families to the edge resulting in loss of their property and will place further pressure on a 45,000 long social housing waiting list.
“This thoughtless decision to cut costs now will have long term consequences which will take decades to recover from.
“The Department of Communities needs to reverse this decision as a matter of urgency. It is abhorrent that people continue to pay the price for political failure.
“All tenants should feel secure in their tenure and most importantly have access to affordable housing.
“We need an Assembly in place to deliver the second phase of the Private Tenancies Bill and provide the best possible support for people at this challenging time.”