Beneficiary numbers leapt in the December quarter, with 18,000 more people on benefits than in the previous quarter, but the government still hails it as a win.
Social Development Minister Paula Bennett on Thursday released figures showing there were 339,095 people on benefits in the last quarter.
That's a jump from 320,942 in the September quarter and 320,041 in the June quarter.
However, beneficiary numbers tend to rise each December quarter, and the government points out the latest figure is the lowest number for a December quarter since 2008.
It's also a significant drop from 351,000 beneficiaries in December 2011 and 353,000 in December 2010.
Beneficiary numbers continually rose from 2008, around the time National became government, but have slowly begun to decline since 2011.
The latest figures show 53,747 people were on unemployment benefits in the December quarter, with the 3000-person increase from September attributed to students finishing their studies.
The number of sole parents on the domestic purposes benefit dropped from 110,738 to 95,138, with 3221 sole parents going off the benefit into work.
Ms Bennett says there's still a lot of work to do to reduce that number further.
Changes to the benefit system from October last year mean sole parents with children aged over five must work part-time, while those with children aged 14 and over must work full-time.
Other changes include moving the sickness benefit, domestic purposes benefits for women alone and sole parents with children over 14, and widows benefits into a new jobseeker support category, and many more people will have work expectations.
The government will roll out the next stage of welfare reforms in July, including new obligations like pre-employment drug tests and a requirement that beneficiaries' children attend early childhood education or school and are enrolled with a GP.
Beneficiaries who fail to meet those obligations, or who have warrants out for their arrest, will face sanctions.