A law change will need to take place in order for this year's census to be cancelled, Statistics New Zealand says.
Under the Statistics Act 1975, the census must be held sometime in 2011.
The census was scheduled to take place on March 8, but was today cancelled in the wake of Tuesday's devastating quake in Christchurch.
About eight million census forms and internet access codes have been delivered to nearly two million households around the country.
Statistics Minister Maurice Williamson said Government Statistician Geoff Bascand advised the census could not be successfully completed because of the quake.
"This is not the time to go door-to-door asking New Zealanders for information when they're dealing with the aftermath of the earthquake," Mr Williamson said.
"It's unthinkable that we would ask this of people. It would be an unfair burden and distraction at a time when they are grieving."
No decisions had been made on when the next census would take place, he said.
However, after the announcement was made, Mr Bascand said because the Statistics Act required a census to be held every five years, the Act would need to be amended.
"To ensure Statistics New Zealand is not in breach of the Act this amendment will need to be in force before the end of 2011," he said.
Statistics NZ was getting advice from Crown Law on the most appropriate legislative or regulatory process to make the required change.
As well as the law change, the Governor-General Sir Anand Satyanand will need to revoke the date of the census.
The revocation process is underway and will be completed before March 8.
Mr Williamson said other implications of not collecting the national data would be delays on decisions around allocations of health and education spending, as well as a lack of information to determine electoral boundary lines.
The existing information from the previous census would continue to be used, but would eventually date and be less accurate over time.
Mr Williamson said the quake had severely damaged the Statistic Departments two buildings in Christchurch with the one processing census information largely destroyed.
He said if the census had gone ahead next month, the information gathered would probably be inaccurate.
The census costs about $90 million and much of those funds would have to be written off as a loss. Some of the work would still be able to be used whenever the next census was scheduled.
About $42 million had been spent so far.
Mr Bascand said the decision would have consequences for people who use the census data in their work - "not least the absence of current information to support health, education and emergency services planning.
"We regret having to take this decision, but I'm sure it was the right one."
About 7000 census delivery workers will affected by the cancellation, but Mr Bascand said any contractual obligations would be met.
Each worker would have earned on average between $1250 to $1500.
This year will be the third time the census has been cancelled. The first was in 1931 due to the depression and the second in 1941 during World War 2.
The census is the official count of how many people and dwellings there are in New Zealand.