Change to 50mg from 80mg may mean fewer drinks for drivers but is expected to cut casualties and costs.
The number of drinks a person can have before driving will come down under new legislation but offenders at the lower end will be fined and receive demerit points rather than face a criminal charge.
From next year a person will be able to drink two to three beers less before driving after the Cabinet yesterday agreed to lower the legal blood alcohol limit from 80mg to 50mg of alcohol per 100ml of blood for motorists aged over 20.
The lower threshold means the average male will be over the limit after about four to six 330ml beers drunk over two hours - instead of six to nine under the present limit.
The average female would be over the limit after three to five beers, instead of four to six beers. The move puts New Zealand's drink-drive laws in line with other developed countries including Australia, Germany, France, Austria and Italy.
The changes come after a two-year review of the impact of lowering the legal blood alcohol limit by 30mg suggested 3.4 lives would be saved a year and 64 injury-causing crashes avoided.
It would also save $200 million in social costs over 10 years.
"Alcohol impairment is a major cause of road accidents in New Zealand, with an average of 61 fatalities, 244 serious injuries, and 761 minor injuries every year caused by at-fault drivers who have been drinking," said Transport Minister Gerry Brownlee.
"The social cost of these injuries and fatalities is $446 million - a huge sum in a country of our size."
The change will bring civil infringements for drivers with between 50mg and 80mg of alcohol per 100ml of blood.
Drivers testing positive at the lower limit will receive a $200 fine and 50 demerit points while those at 80mg and above will face criminal charges.
Mr Brownlee said the choice of civil infringements was "not a soft option".
"Drink-driving is a serious matter and I would note that accumulation of 100 demerit points for driving-related offences in any two-year period can lead to three months' suspension of a driver's licence," he said.
Labour MP Iain Lees-Galloway, whose member's bill was drawn from the ballot to cut blood alcohol limits in September, said the Government's decision to lower drink-drive levels was to be applauded.
But he said the change should have come years ago and it only happened after polling confirmed most people supported the lower limit. "The evidence is no stronger today than it was in 2010 when Steven Joyce kicked for touch," he said.
Director of the National Addiction Centre professor Doug Sellman said the change would have an impact on alcohol-related harm but it would require further reforms on pricing, accessibility and marketing to make a big difference.
"Alcohol has been such a dominating, harmful presence in New Zealand for far too long," he said.
Alcohol Healthwatch director Rebecca Williams said the reduction would support drinking moderation more generally and an infringement approach for lower level offenders would save an unnecessary burden on the courts.
AA spokesman Mike Noon said research here and overseas shows that at the present limit drivers are too impaired to safely drive.
"Lowering the limit will reinforce the risks of drinking and driving to the public. The AA hopes it will have a similar effect to the zero alcohol limit for drivers under 20 which has seen the number of young drink-drivers fall by 22 per cent."
Mr Brownlee said police data collected over the past 22 months showed 53 drivers were involved in fatal and serious injury crashes with blood alcohol readings of between 51mg and 80mg.
Drivers with very high blood alcohol and repeat offenders caused a much higher proportion of alcohol-related road deaths, he said.
The new legislation will receive its first reading before the house rises for Christmas.
Relearning basics of life after crash
Abby Benge is learning to talk and walk again after a drink-driver ploughed into the car she was driving, killing one of her friends and seriously injuring herself and two others earlier this year.
Ms Benge was driving to Raglan for a Valentine's Day dinner when a Hamilton woman drove her car across the centre line and crashed into her on State Highway 23 near Whatawhata. The driver, Amanda Lowery, had a blood alcohol level of 190mg per 100ml of blood - more than double the legal limit of 80mg.
Ms Benge's close friend Shanya Kumitau died five days later in Auckland City Hospital while her two other friends, Rebekka Marsh and Samuel Tait, also suffered serious and multiple injuries.
Ms Benge suffered a brain injury and many broken bones. She spent 40 days in Waikato Hospital - 30 in intensive care - followed by 16 weeks in an Auckland rehabilitation centre.
Last night her mother Theresa said lowering the blood alcohol limit from 80mg to 50mg was "a good thing".
"In our situation the lady was well over the limit and she still drove but I think the Government is doing a responsible thing, but people need to be responsible too."
Mrs Benge said her daughter was studying to become an early childhood teacher but still needed support because her brain injury had affected her speech and language processes. She's also had to learn to walk again.
Ms Benge, who turns 20 today, has also resumed her piano studies after the accident.
Last month in the High Court at Hamilton, Lowery was sent to prison for four years and two months after pleading guilty to driving with excess blood alcohol causing death and of driving with excess blood alcohol causing injury.