Relationships Aotearoa have been told to "calm down" by the Social Development Minister.
Anne Tolley says the counselling service is heading for a $1.5 million deficit and there's no way for them to sustain that.
She denies the relationship has broken down and says Relationships Aotearoa were the ones who pulled out of negotiations last night.
"MSD were talking as late as yesterday as putting through a financial and clinical team to identify who the clients are and work through the process," she told media this morning.
"The Government cannot underwrite organisations, we're happy to pay for services, but we need to know it's honoured.
"I think they should be calming down and talking quietly with MSD about the support that's needed now for their clients."
Ms Tolley says the ministry is willing to pay - urgently - to sit down with the group to work out who their most vulnerable clients are and ensure they get the support they need.
She thinks there's about 500 urgent cases.
But a spokesman for the group says there are no other providers in Northland, south of Timaru and very few in places such as the Bay of Plenty.
The sort of people who need the most urgent help are those at risk of suicide, homicide and sexual offenders.
The spokesman says they thought they had two weeks to try and transition clients but instead they have cancelled all their appointments, as of today.