She knows there are thousands of people around the state on waiting lists to secure social housing.

Which is why the single mother has continually applied to the government to let her downsize from her three bedroom home in Koonawarra to a smaller, more manageable property for her and her daughter.

"You hear about families living rough, sleeping in tents, and I said this house can go to a family because they could use it properly," Ms Diamond said.

Single mum has no escape from Christmas hell

"I'm asking to move to a smaller property and give somebody else my house. We don't need a house this big, it's wasted on us."

Ms Diamond is the other side of the debate around Housing NSW's controversial over-occupancy policy, dubbed a "bedroom tax" by the state opposition.

Under the policy, public tenants in houses with more bedrooms than they need will be relocated, or charged higher rents if unwilling to move.

The policy sparked uproar among tenants worried about being forced to move against their will.

However, despite living in the Shellharbour area - one of the areas most targeted for housing re-allocation, with 600 people on housing waiting lists stretching longer than 10 years - Ms Diamond's requests for a smaller property have been denied.

"I went on the transfer list in 2007, and kept ringing to see what the update was, but it was just so discouraging to have made no progress," she said.

"I took my name off the list in 2009, but put it back on two years ago.

"There are so many people looking for a place like mine. I know people who need the house I have."

Shellharbour MP Anna Watson said it was "bizarre" that, despite the government targeting Shellharbour as an area housing reallocation was necessary, Ms Diamond's offers to downsize were ignored.

"There is not one person in my electorate happy about this policy," Ms Watson said.

Ms Watson has heard several stories similar to Ms Diamond's, and put questions to Minister for Family and Community Services Pru Goward about how many people had requested to downsize their homes. She said these questions were ignored.

"There is no transparency or formula as to how the government is approaching this. It seems very ad hoc," she said.

Ms Diamond remains on a Housing NSW waiting list to be moved to a smaller house, while more than 3300 people wait in housing queues in the region.

"There just seems to be barriers everywhere," she said.

"There's so much red tape that the department has to follow. It makes it very hard."