Amid word thousands of the city's poorest are scrambling for housing, Mayor Michael Bloomberg defended the city's housing authority Friday, saying there is nothing it could do about the cuts.

The New York City Housing Authority abruptly announced Thursday that 3,000 households are holding Section 8 vouchers, which use federal money to subsidize rent, that are worthless.

Additionally, NYCHA has suspended giving out any more Section 8 vouchers, meaning an unquantified additional number are also facing problems, even as the unemployment rate drops has dropped slightly in the city.

As to why this happened, Mayor Michael Bloomberg on his radio show Friday called it a perfect storm, all related to the economy. There's less turnover in Section 8 apartments, and the federal government is giving out less money than is needed.

"People have these vouchers, they can pay their rent and then sometimes they don't need them anymore, they move in with a family, move out of state, or whatever, and so we get those back and you recycle them; it's sort of a permanent thing,” said Bloomberg on his weekly radio show. “Because of the economy, people haven't been moving out."

Officials say more New Yorkers are on Section 8 assistance now than at any other time, and they are working with other city agencies to secure housing for those affected.

About 50 people with revoked Section 8 vouchers live in an East Village transition shelter. They all are disabled, formerly homeless, and were poised to move into their own homes until Friday. Some told NY1 that they were told in an emergency meeting that they had a week to find a low-income home that is accessible to the disabled in New York City, or would lose Section 8 benefits.

One resident, Cindy Lessey, was working until lupus made it impossible two years ago. She now is blind in an eye and has osteoporosis.

"We're just trying to get by like everybody else," said Lessey.

Another resident, Rafael Figueroa, was born with spina bifida, and said he was on the cusp of finding one with a placement agency.

"Just to hear his news that my voucher will become just a piece of paper with writing on it that doesn't mean anything, it's not a good thing," he said.

The shelter is supposed to limit stays to a year. Yet city NYCHA Chairman John Rhea said Friday that residents without Section 8 would be forced into single room occupancies, or SROs, but not out on the streets.

"No families will be homeless as a result of our decision," said Rhea.

Few answers were given Friday on where funding for such shelter would come from in the face of the state and city's growing deficits.

Some say the Bloomberg administration waited too long to spend tens of millions of federal dollars available for housing that were ultimately taken back by the federal government. Housing officials have hotly denied that charge.