The Government is "unlikely" to outright ban the sale of tobacco, the Prime Minister has said.
John Key's comments come as a ban on retail displays of cigarettes kicks in today.
New regulations, introduced under law passed last year, will require all retailers to ensure tobacco products are hidden from view.
Retailers will also be banned from referring to the sale of tobacco products in their trading names.
Associate Health Minister Tariana Turia, who is behind the ban, said last year that the law change would remove the "loophole" of tobacco displays.
"Retail displays, innocently positioned alongside everyday confectionary and sweets, are a key component of making cigarettes attractive to recruit young smokers. We're not going to tolerate this any longer."
Most dairies will have a roller door which comes down to cover the displays.
However Prime Minister John Key told TVNZ's Breakfast it was "unlikely" his Government would ever go further and ban the sale of cigarettes.
"The reason for that is it's tremendously difficult. Effectively you would be saying that cigarettes are a banned substance in New Zealand," Mr Key said.
"What we are trying to do is say look, 'smoking is bad for you, we would prefer that you didn't smoke, we will give you every encouragement not to smoke'."
"Smoking kills you with greater predictability than almost anything else. If you smoke for 20 years or more, you are likely to die 20 years earlier than you otherwise would. That's why we want people to give up.
"[But] people have got their own choice and people will smoke, they know the risks and it may claim their lives."
The law that introduced the display ban also allows enforcement officers to instantly fine retailers $1000 for selling tobacco to people aged under 18.
It also increases the maximum penalty for selling tobacco to underage people from $2000 to $10,000.
A series of tax rises - with more on the way - has made New Zealand cigarettes among the most expensive in the OECD.
But last week tobacco giant Philip Morris started an aggressive fightback against tobacco regulations, saying they go too far.
The company, which has the third-largest share of the New Zealand tobacco market, is distributing cards to shops directing customers to a website through which smokers can have their say on the regulations.
The firm has also set up a website to allow the public to show their opposition to the restrictions.
Sydney University professor of public health Simon Chapman said Philip Morris had run a similar campaign website in Australia, but the number of responses it generated was "embarrassingly small".
He said the verdict of a tobacco industry court challenge to plain packaging was awaited.
The director of Action on Smoking and Health, Ben Youdan, said statements on the Philip Morris website were "feeble and pathetic".
An example was that the new retail display ban on tobacco products would inconvenience smokers by slowing down their purchases.
Surveys had found smokers generally supported tighter control of tobacco, he said.
Otago University researchers said last month that 65 per cent of 1300 surveyed smokers supported tighter regulation of tobacco companies.
And while 68 per cent of smokers in a 2007/8 survey said the tobacco tax was "too high", 59 per cent of them said they would support increases in the tax if the extra revenue went towards promoting healthy living and supporting quitting.
Marketing expert Professor Janet Hoek has said her research indicates plain packaging is very likely to work.
"We've got very strong research evidence that plain packaging makes smoking very unattractive to young people and young adults," Professor Hoek said.
Smoking in public places
"Council by council, outdoor smoking bans are getting more and more repressive."
- Tobacco company Philip Morris
In 2010, around two in three people thought that smoking should not be allowed at outdoor sports fields or courts."
- Health Sponsorship Council survey report
Retail tobacco display ban
"This display ban will slow down the normal transaction time and force customers to wait in longer queues."
- Philip Morris
"That's rubbish. Smoking creates longer queues in cancer wards. That's far more concerning than waiting an extra five seconds for someone to take your cigarettes out of a drawer."
- Action on Smoking and Health director Ben Youdan