Prime Minister John Key says he is disappointed with the flag result and that the National Government will not revisit the issue under his leadership.
Mr Key, speaking to reporters at Auckland Airport this evening, said that he respected New Zealand's choice of flag.
He took some positives from the result, pointing out that nearly one million people will have voted for change by the time the final results came in.
Mr Key also defended the process, saying it was lengthy and considered.
Asked whether the referendum process had been worth $26 million given it led to no change, he said it had sparked an "enormous", healthy debate across the country.
"You can't shy away from a debate or a discussion about nationhood," he said.
Just because the referendum did not produce the outcome he wanted "doesn't mean it wasn't a worthwhile process".
"We ... as a country had a nationwide discussion about our flag, about nationhood, about what we stand for," Mr Key said.
"And I think that's been an important discussion we not only should have had, but must always have.
"I don't think we should shy away from ... contentious issues just because they are by nature contentious."
Mr Key said he would now be supporting the current flag.
"What this process has shown over the last three or four months is that we as a country can get out and fly our flag.
"We can use it, and we can show the world how proud we are of New Zealand.
"So my only request to New Zealanders now would be to rally behind the flag that's been chosen by the majority of New Zealanders.
"To go out and use it, to wave it, to be proud of it, and to celebrate the fact that we've got an amazing country."
Despite launching the referendum and strongly advocating for a flag change, Mr Key said he did not think the defeat would be a black mark on his legacy.
New Zealand has voted to retain our current flag. I encourage all NZers to use it, embrace it and, more importantly, be proud of it.— John Key (@johnkeypm) March 24, 2016
But he would not be revisiting the flag issue.
"It certainly won't come back to Parliament while I'm the Prime Minister.
"I'm certainly not a fan of becoming a Republic ... so that's a decision for a future government to make."
The silver fern lapel pin he has worn during the referendum will be put away - but he will not be throwing it out.
"I will be keeping that one," he said.
Meanwhile Deputy Prime Minister Bill English says New Zealanders should embrace the decision to keep the current flag.
The nation has voted to retain the existing flag, according to results out tonight.
"I acknowledge there will be those who are disappointed with the outcome, but the majority of New Zealanders have spoken and we should all embrace that decision," Mr English said.
Mr English said a voter turn-out of 2,119,953 showed how deeply passionate New Zealanders were about their national identity.
"Now a flag has been decided I encourage all New Zealanders to use it, embrace it and, more importantly, be proud of it."
Green Party co-leader Metiria Turei says the flag result is a major failure for the Prime Minister, who she says has politicised the process.
"John Key's overt campaigning for his favourite flag tainted the referendum from the outset and cost all New Zealanders the opportunity to get a new flag.
"Lots of New Zealanders support a change of flag but voted for the current one because the Prime Minister's interference ensured they weren't given a proper choice. John Key alienated people by politicising the process and attacking those who didn't like his choice of flag."
Labour leader Andrew Little said New Zealanders had rejected John Key's flag project, that had "divided the country" and "become a personal crusade".
"At every stage of the process John Key screwed the scrum in favour of his flag. He made his desire for a fern flag known from the outset. Panel members were admittedly influenced by this and three of the four flag options featured ferns.
"When New Zealanders said they wanted a straight yes/no vote in the first referendum, he failed to listen. He failed to treat the public with respect and put his personal agenda first. Time and again we heard voters say there were higher priorities for the $26 million the referendum cost taxpayers."
Mr Little, who voted for the current flag, acknowledged that the result showed a large number of New Zealanders wanted a new flag.
Labour could well look at the issue in the future, but Mr Little said he believed that should come after the country had a debate about whether it becomes a republic, with a New Zealand head of state.
"There are a lot of things I've picked up from New Zealanders as I've discussed the flag issue with them over the last 15 or 16 months, and a pretty common sentiment is, 'Let's come back to this at the end of the reign of the current monarch'."
New Zealand First leader Winston Peters, who has been a staunch supporter of the current flag, said the country had now spoken, and people should unite behind the existing flag.
"All credit to the thousands who turned out to prevent change - they were determined not to be a push over...while we respect the views of the many who voted for a new flag, it was not to be.
"Whether this was the time for a flag change or not, it did not come about because the PM's handling of it ensured the result we got tonight."
Mr Peters told the Herald he did not think the result would put an end to the push for a new flag.
"I think that it could possibly rise in the future. But whatever the future flag is, I don't think New Zealanders want it to be an expensive business, I think they'll want it to be during the time of an election itself...and above all, they will want it to signify an understanding of our history and where we're going."