It's the latest move in the legal battle between the two cities over the program, which relocates homeless families from New York City, with NYC paying landlords a year's rent in advance in one lump sum.
CBS2 has extensively covered the program in our "Forgotten Families" series.
New York lawyers say 34 families were planning to move to New Jersey's largest city and now they can't. They call Newark's recent legislation unconstitutional, saying it's discriminatory against people with low incomes.
Some 1,200 families have already relocated there from New York City.
CBS2's reporting, which is mentioned in the countersuit, has found some of the homes they were sent to live in were uninhabitable.
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