Defence Force chief Lieutenant General Rhys Jones will not have his role extended and he will stand down in January, the Government has confirmed.
Defence Force Minister Jonathan Coleman confirmed he had told the Defence Force his decision not to extend the role last week, but it was only after he was questioned by media today that he made the announcement publicly.
The seasoned officer has been in the role since January 2011 when Prime Minister John Key appointed him for a three-year term in order to monitor progress in a major review of Defence Force spending.
Previous heads of defence had had their terms extended by two years to a five-year term, Dr Coleman said.
Lieutenant General Jones said a three-year posting cycle for Defence's senior jobs encouraged talented people to strive for advancement.
"As a result of a new Chief of Defence appointment, other senior opportunities will open up for several others," he said.
The Labour Party has accused the Government of making a "scapegoat" of Lieutenant General Jones for multiple safety failures in the New Zealand Defence Force.
But Dr Coleman said that was untrue, and the only reason for Lieutenant General Jones to stand down was because he had reached the end of his contract.
He said the defence head had also reached savings goals for the force.
"He's hitting the targets on that. We've saved $191 million to the financial year just past - we're on track to save $250 million in total and Rhys has done a very good job.
"The fact of it is; it was just the end of his three-year term and my view is that these should be three-year positions."
If the role was continually extended, it created a "back up effect" in the force where others did not get an opportunity to fill the role, Dr Coleman said.
When Lieutenant General Jones was appointed, Mr Key said his term in the role was likely to be extended if his management of the process of cutting Defence Force spending was satisfactory. He was tasked to cut $400 million a year.
Today, Dr Coleman said the role should only be extended if there was a piece of work that couldn't be finished by someone else.
"Rhys has achieved the goals that we've asked him to do. He can retire with his head held high."
The Labour Party announced the news publicly today and Dr Coleman defended not being the first to deliver the news by saying it was not unusual not to tell the public the role would not be extended.
"We certainly would announce the new chief of Defence Force."
That decision would be released in December, he said.
Labour Party defence spokesman Phil Goff said a recent safety review pointed out that for two years the Government had not implemented its key recommendations.
"The Minister is responsible for oversight of the Defence Force's actions or inactions. He must have read the Cosman Review, but apparently never raised questions as to why it was not acted upon."
The review, by health and safety analyst Mike Cosman, found gaps in the force's health and safety policies that needed to be closed.
Dr Coleman has said the Government would be implementing the report's recommendations.
Lieutenant General Jones, 53, enlisted with the Army in 1978, graduated from the Royal Military College, Duntroon, Australia in 1982 and has held a variety of operational, training and senior command roles.