Asylum seekers face a two-tier system which denies them services offered to other refugees, advocates say.
A host of non-governmental organisations are calling on the Government to revise its resettlement strategy, to ensure asylum seekers get access to housing, education and healthcare.
To mark World Refugee Day today, Amnesty International also wants New Zealand to "step up" and increase the number of refugees offered protection, arguing the limit of 750 limit is too low.
International law states there is no difference between those who flee to New Zealand claiming asylum, and so called "quota refugees" who arrive from camps as part of the United Nations programme. About 300 asylum seekers arrive every year, with about a third recognised as refugees.
Auckland Refugee Council executive director Marian Kleist said they faced barriers accessing the same support, English-language education, housing and healthcare that was offered to quota refugees.
"They are often traumatised having had to flee, often leaving family behind," she said.
"Many of them are the most destitute."
In 2012, the Government cut funding to the council, which helps refugees navigate the system, find homes and apply for benefits.
"We have no idea how we are going to get through the year," Kleist said.
"Immigration and the Government are not interested in giving any support to asylum seekers whatsoever.
"To be perfectly frank, if we didn't offer them accommodation they would either be living in very vulnerable situations or on the streets - and this includes families at times too."
Changemakers Refugee Forum researcher Alia Bloom agreed the disparity had created a "twilight" of "isolated and invisible" people.
Her report "Marking Time", published last year, found asylum seekers struggled from a lack of communication from officials. Often already traumatised, they were left stressed and often exploited through illicit demands for fees from their community.
"If there is no distinction under international law . We don't really understand why there should be a distinction in the services and support they get," Bloom said.
"The spectre of the 'boat people' - even though they never arrived - seems to be prominent in that political consciousness."
Amnesty New Zealand's advocacy manager Amanda Brydon said New Zealand had an obligation to protect and recognise asylum seekers' rights.
"They need to be treated as people and have access to these services," she said.
"It's not just about putting in obstacles so people go home... anecdotally, it seems like they are treated like the bad guys.
"The fact that they have gone through so much already... are often torture survivors or have left family at home. It doesn't need to be that hard."
Brydon called for a hike in the UN quota, which had not changed since 1987, and an additional "crisis quota" to give sanctuary to those fleeing conflicts such as those in Syria and South Sudan.
Immigration minister Michael Woodhouse said the Government had a "strong record of supporting refugees and refugee communities".
A resettlement strategy launched in 2012, was commended by the UNHCR as world-leading.
"All asylum seekers in New Zealand are eligible to access public health and mental health services,' he said.