Research showing thousands more children are being hospitalised for conditions associated with poverty shows the government needs to act urgently, say children's groups and Labour.
The Children's Social Monitor Update, released on Monday, says 4180 more children were hospitalised for "socio-economically sensitive medical conditions", such as infectious and respiratory diseases, in 2011 than in 2007, before the global economic crisis.
On average about 36,000 children were admitted each year.
That's despite a new pneumococcal vaccine possibly reducing the number of hospital admissions for ear infections and bacterial pneumonia in 2011.
The Child Poverty Action Group (CPAG) says much more must be done, and quickly, to reduce New Zealand's "distressing rates of ill health amongst Maori and Pacific children which are rooted in poverty".
It says for every 100 "European or other" children hospitalised last year there were 167 Maori or 251 Pacific children admitted.
Families on severely restricted incomes - such as beneficiaries - suffered stress, poor diet and were more likely to live in substandard or overcrowded housing, the group said.
"The government should increase the sustained assistance it gives low income families so they can provide for children now - the children cannot wait for more jobs with adequate wages to appear," said CPAG's Innes Asher.
"The poor state of children's health is the most obvious sign that New Zealand is not investing enough in children's early years."
Labour says the government is failing to lift children out of poverty and there are not enough jobs for their parents to go to.
"Children reliant solely on benefit recipients are often our most deprived. National has done nothing to address the drivers of poverty, with its ministerial committee and White Paper failing to prompt any meaningful change," said child spokeswoman Jacinda Ardern.
Labour wants the government to support its Child Poverty Eradication Bill, which would require government to focus on setting meaningful targets to reduce the impacts of poverty on children.