The minister of labour and social affairs was quoted on Monday by the Arab News daily as saying the ministry aimed to reduce the number of beggars by helping them find jobs and place the elderly in specialised centres.
“Some people resort to begging just to make easy money without actually being in need. It’s a kind of disease,” said Ali al-Namlah.
But Dr Saad al-Faqih, a London-based dissident, said that poverty in Saudi Arabia is an increasingly serious social problem.
"Homelessness is part of poverty and when we say poverty we mean real poverty," he said. "People estimate at least 30% are living below the poverty line," added the head of the Movement for Islamic Reform.
Saudis are lining up at the royal palaces pleading for help, he said, adding the royal family is consuming 60-80% of the country's revenues.
"Their dignity prevents them from begging," he said. More and more Saudis are unable to meet their basic essentials.
"They are unable to pay water bills. They are unable to pay electricity bills. Meals are hard to come by," said al-Faqih. "We're talking about major areas in the big cities", he said.
While there are no official figures, more than 12,000 beggars were arrested in Saudi Arabia in 1998 of which 9000 were foreign and expelled.
Approximately 100,000 Saudis enter the workforce every year.
Al-Faqih expressed doubt that Saudi Arabia's poverty crisis could be resolved as long as the House of Saud was ruling the country.
"The manner of running the country does not provide enough room for change to create jobs and rid of corruption," he said, adding corruption is "endemic and the norm".