Mr Kickl has promised a very strict asylum policy
Austria's far-right interior minister has caused outrage by using a term associated with Nazi death camps to say asylum seekers should be concentrated in one place.
Herbert Kickl from the Austrian Freedom Party (FPÖ) rejected accusations he chose the expression as a provocation.
Vienna's deputy mayor said Mr Kickl had gone too far.
Maria Vassilakou said the language of Nazism could not be allowed to creep into people's lives.
Mr Kickl said he wanted "services centres and infrastructure that would allow the authorities to concentrate asylum seekers in one place".
He has promised to implement a very strict asylum policy.
Steffi Krisper of the liberal Neos party said it looked "like a deliberate provocation which is subsequently denied in a half-hearted fashion".
When questioned on his choice of words, Mr Kickl said a "semantic discussion" was not needed and he had not meant to provoke.
The government of Prime Minister Sebastian Kurz says the current system, which sees aid groups provide most asylum seeker accommodation, is inefficient.
Austria is run by a coalition government formed by Mr Kurz's conservative People's Party and the far-right Freedom Party.
The deal made Austria the only Western European state with a governing far-right party, opposed to migration and the European Union.
It follows an election in October that failed to yield a concrete result.
The FPÖ has distanced itself from its founders' Nazi past but has had to expel several officials in recent years over Nazi-related allegations.
