Mr Naughten said the criteria was too restrictive and may limit the benefits to a small number of people.
Under the revised measures agreed by Cabinet, householders whose family homes flooded between December 4th, 2015 and January 13th, 2016 can seek financial assistance of up to €200,000 to help them relocate.
The scheme requires that the home be uninhabitable, at risk of future flooding and cannot receive flood protection.
Mr Canney will expand the scheme to ensure homes in turlough areas that flooded after these dates will also be considered.
The Minister expects between 80 and 90 houses to be built under the scheme this year, at a cost of €2 million to the State.
However between €19 million and €20 million will be made available through the budgetary process over the next few years.
Under Mr Canney’s proposals, householders would be asked to meet the local authorities, the OPW and the Department of Social Protection to assess if they are eligible.
A homeowner would then have three months to formally accept the offer of relocation.
The scheme would allow for a family to receive financial assistance to buy a new home. The amount would be based on market value in the area and guidance from the local authority, but would not exceed €200,000.
A legal agreement would be drawn up between the two sides, which would allow for the demolition of their house.
The Minister said the plan is to start contacting homeowners in the coming weeks. He said this is a voluntary scheme that would not be forced on people.