The federal government did an about-face Friday on funding programs to help the homeless.

Ottawa has decided to fund 15 new projects in Winnipeg that were under the Supporting Communities Partnership Initiative, reversing a decision that upset agencies that house and help homeless people in the city. The money is significant — $4.2 million.

Earlier this week, the Winnipeg Housing and Homelessness Initiative had sent out letters informing a number of agencies that there was no federal money for their new projects, although that money had been promised earlier.

One organization, the North End Women's Centre, told CBC News on Thursday it was hoping to add 10 new transitional housing units for chronically homeless women, including those with addictions and mental health issues.

Executive director Bernice Getty said that without the federal funding, the $400,000 project would be on hold indefinitely.

"I'm so disappointed to know that they have no problem with taking money from these women directly," Getty said Thursday.

$37-million surplus

But on Friday afternoon, federal Human Resources Minister Diane Finley, whose portfolio includes the National Homelessness Initiative, reversed the decision.

Now, a $37-million surplus in last year's housing budget will be made available to homelessness projects across the country, including $4.2-million earmarked for the 15 Winnipeg projects.

"The minister has now released [the] $37 million immediately, so now we can proceed with the 15 projects that were recommended by the community advisory board," said Ken Burfoot, manager of the Winnipeg Housing and Homelessness Initiative, on Friday.

"For us, you know ... we move on the information that we have," Burfoot said. "The information that we had at the time was that these monies would be released later in the year, December. And then we were very pleased that they'd been released immediately."

Burfoot said the $4.2-million initially promised will be spent on the Winnipeg homeless programs.

Cuts were 'cold and heartless': NDP MP

Earlier on Friday, Winnipeg NDP MP Judy Wasylycia-Leis called the funding cuts "cold and heartless," expressing concern that it would mark the beginning of the end of federal funding for housing projects.

"This is devastating for the fundamental human right of providing people with adequate housing, and especially focusing on those most in need," Wasylycia-Leis said Friday morning.

"We're talking about cost-effective proposals that give bang for the buck that actually help reduce crime, that keep people out of trouble."

But on Friday afternoon, Wasylycia-Leis told CBC News that Finley called her personally to inform her the funding had been restored.