The New Zealand Nurses Organisation has rejected the latest pay offer of two percent from district health boards.

Both parties are still around the negotiating table but Prime Minister Jacinda Ardern says the country can't afford nurses to take industrial action and is urging district health boards to set up an independent panel to resolve the issue.

“Well, it would the nurses, the DHB’s and an independent panellist to go through the process of looking at all the issues. It would bring someone external into that process.”

If an agreement isn't reached, 27,000 nurses and midwives could look at the industrial action in two weeks’ time.