New Zealand, other than Auckland, will move to Alert Level 1 next Monday, September 21 at 11.59pm, Prime Minister Jacinda Ardern said today.
The move, however, is contingent on no Covid-19 cases appearing outside of Auckland between now and then.
Auckland's position will also be reviewed that day, with an eye to increasing gathering limits.
If Cabinet agrees to proceed, Auckland's changes will come into force on Wednesday, September 23 at 11.59pm.
Public transport operators will also no longer enforce seating and social distancing rules, but mask use will still be compulsory.
Prime Minister Jacinda Ardern made the announcements today from Dunedin after Cabinet's alert level review.
Auckland is currently at Level 2.5, while the rest of the country is at Level 2.
Ardern said that during the two weeks Auckland has been at Alert Level 2.5, there has been 36 additional cases of Covid-19 community transmission identified.
Within the Auckland cluster, she said, remains "a potential trouble spot" – the new sub cluster from the bereavement event related to the Mount Roskill Evangelical Fellowship church .
It saw 15 more cases, she said, and while there was no evidence of significant spread outside the Auckland cluster, it raised the possibility more people have been exposed to Covid-19.
"We should be cautious of moving to Level 1 immediately," Ardern said.
Director General of Health Dr Ashley Bloomfield recommended a short extension to the current alert levels.
Auckland's Alert Level 2.5 will be reviewed next Monday, September 21 - with a view to increase gathering limits and any changes will take effect from Wednesday, September 23 at 11.59pm.
"While our aim is to speedily move down alert levels safely, we also need to be focused on the future, on getting back to Level 1, but in a sustained way and not rushing there only to have to bounce out of it soon after," she said.
On why the rest of the country could not immediately move to Alert Level 1, Ardern said modelling by the Ministry of Health suggested there is a 25 per cent chance of Covid-19 cases spreading outside of Auckland.
"So while the cases are currently in Auckland, with inter-regional travel open there remains a risk of spreading the virus to the rest of the country.
"It only requires one person travelling and attending a super-spreader event somewhere else in the country and we could be looking at further restrictions everywhere.
"The Level 2 precautions we have in place continue to act as a safety barrier for flair ups in the rest of New Zealand."
Labour's coalition partner NZ First immediately invoked its "agree to disagree" provision over today's decision to keep the rest of New Zealand at Level 2 until next week.
"Despite modelling suggesting a small risk of undetected cases outside Auckland, no evidence has yet emerged that this risk has been realised," Winston Peters said.
"New Zealand First supports the continuation of Alert Level 2 in Auckland [but] it cannot support a continuation of Alert Level 2 outside of Auckland until Monday 21 September at midnight."
ACT's David Seymour was also critical of the restriction decision, tweeting: "The Government says it has done a great job, but also that we must stay locked down.
"It cannot have it both ways. Either it has failed, or restrictions can be lifted."
Auckland moved to Alert Level 2.5 on August 30 after being at Alert Level 3 since the beginning of the August community outbreak, and the rest of New Zealand has been at Level 2 since August 12.
Ardern told media before the last alert level review that Cabinet would consider the nature of Auckland's Covid-19 cluster, its containment, compliance, the economic impact and the time period at Level 2.5 when it meets to review alert levels.
Yesterday, two news cases of Covid-19 were reported in New Zealand. One new case was a returnee who is in managed isolation and the other a health worker from Auckland's Jet Park quarantine facility. An additional case of community transmission, a child, was announced today.