Allan resigned from her ministerial portfolios on Monday morning, after she was charged with careless driving and refusing to accompany a police officer, following a car crash in Wellington.
She had only recently returned to Parliament after taking a few weeks off to address mental health struggles.
Prime Minister Chris Hipkins said Allan was offered more time off, but indicated she was ready to return to work.
Hipkins said it was an "absolute tragedy" it had got to that point.
"People who are working through these issues, in some cases that's a significant step in their recovery, is to re-engage with the positive things in their life," Hipkins said on Monday.
"For Kiri, being at work was a very positive part of her life. She had been receiving support, she was in a much better space.
"Had I been able to foresee this, of course there would have been more things that we might have been able to do. I don't have a crystal ball any more than anyone else does."
National leader Christopher Luxon questioned why Hipkins allowed Allan to return.
He said the prime minister had failed to set clear expectations to his Cabinet, and there was "something going wrong" in the culture and leadership of Cabinet.
"Those are decisions that he has to be accountable for. All I can observe from my position is a series of ministerial appointments and behaviour that has not been well-managed. It has gone on and on."
Luxon said Allan's position was untenable, and it was right for her to step down.
"We want support for Kiri, that's absolutely important. But we also need to say look, this is a government, that again, yet again, we're having another set of conversations for the rest of the week when the New Zealand people want us focused on them, not focused on themselves which is what this government is doing."
ACT leader David Seymour would not be drawn on the nature of Allan's behaviour, without knowing all the facts.
"Clearly there will be people who have lost someone to a drunk driver who will be completely outraged. There's also a person who's been under enormous distress. Without knowing the exact circumstances, I think it would be wrong to try and balance those up."
Seymour instead took aim at the prime minister, saying the government was going through a lot of "churn", and was unable to replace its talent with another portfolio reallocation.
"It feels like a caretaker government. They've run out of reserves, cannot field a full team of ministers, they're really just caretaking until the election."
All Allan's roles have been allocated to existing ministers.
Police and justice portfolios were now being held by the same person, Ginny Andersen, which Seymour said would create tensions.
"There's the rule of law, and the rule of law restrains the police. When you have one person doing both those jobs you don't have those two important interests represented, you have a conflict of interest."
The prime minister pointed out Dame Annette King had held both roles in the Clark government.
Hipkins said if any potential conflicts were to arise between Andersen's dual roles, associate justice minister Deborah Russell would step in.
Allan has returned home to the East Coast. She has been in Parliament since 2017, and won the East Coast seat in 2020.
In a statement on Monday morning, she said she would be taking time to consider her future in politics.
"Clearly it's something we'll be wanting to get a decision on fairly quickly," Hipkins said.
