Prime Minister John Key says he is disappointed New Zealanders have voted to keep the current flag but has promised his Government will not revisit the issue.
Speaking after the preliminary results of the referendum were announced last night, Mr Key launched a staunch defence of the $26 million project, as opposition leaders accused him of "tainting" the vote and "dividing the country".
The vote was 56.6 per cent to 43.2 per cent for the current national flag, with 2,124,507 people casting votes - a turnout of 67.3 per cent.
Mr Key, who had campaigned for the Kyle Lockwood-designed silver fern flag, said that flag had been 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", he said.
"We ... as a country had a nationwide discussion about our flag, about nationhood, about what we stand for. 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.
• Explore how each electorate voted and a breakdown of turnout in our Herald Insights interactive
He added: "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."
Mr Key said he did not think the defeat would be a black mark on his legacy, but said his government would not be revisiting the 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."
He said he would not be throwing out the silver fern lapel pin he wore during the referendum. "I will be keeping that one," he said.
Green Party co-leader Metiria Turei said the flag result was a major failure for the Prime Minister. "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 the flag project 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."
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.
One of the most vocal opponents of a flag change, the Returned and Services Association, says it was delighted but not surprised at the referendum result.
RSA national president BJ Clark said this evening that the decision to keep the existing national flag was "an inspiring, strong show of democracy in action".
"New Zealand service personnel sign up for a number of reasons, but one of the foremost of these is to safeguard the continuing of our way of life," Mr Clark said.
The flag's creator, Melbourne-based New Zealander Kyle Lockwood, does not want to comment until the final result is released.
He said earlier this week that he would remain optimistic of victory right until the last minute. If his flag lost, he said it could be turned into a beach towel.
Lockwood flags on Trade Me
Barely an hour after the referendum result was announced, 61 Lockwood flags were up for sale on TradeMe. However, many appear to be long-running auctions by official flag sellers.
When the final result is confirmed on Wednesday, it will bring to a close a two-year process which culminated in the first-ever public vote by a country on its national flag.
Mr Key launched the flag referendum in a speech at Victoria University in March 2014.
Polls at the time showed New Zealanders supported a change to the century-old national flag. New Zealand First aside, Parliament was also overwhelmingly in favour of change.
The main opposition throughout the process has come from military veterans. As World War I commemorations took place last year, the Returned and Services Association (RSA) urged the public not to dump the flag that young soldiers fought under.
In early 2015, a panel of prominent New Zealanders was appointed to oversee the process. Some questioned the decision to include no designers on the 12-person panel, which was made up of ex-sportspeople, academics, advertising gurus and businesspeople.
More than 10,000 flag designs were submitted by the public, which the panel cut down to 40 alternative flags. The shortlist was dominated by silver ferns and koru, though many retained the Southern Cross.
At that stage, opposition to a change intensified. Critics questioned the $26 million cost of the referendum and the inadequate process. Some sections of the public lamented the absence of a forward-thinking design in the final contenders.
The longlist was trimmed to four flags, of which three featured silver ferns and one a koru. After a public campaign, a fifth contender, Red Peak, was added to the ballot.
In the first referendum in November and December, a black, white and blue silver fern flag was chosen as New Zealand's alternative national flag.
Turnout in the referendum was relatively low, at 48.78 per cent. About one in 10 votes was discarded, likely as a result of protest votes.
The silver fern flag, designed by Melbourne-based New Zealander Kyle Lockwood, was then flown in more than 250 sites across the country to help voters make up their minds.
As the second vote neared, the issue heated up.
The Change the Flag campaign ran advertisements featuring high-profile Kiwis, who urged voters to pick the silver fern design. Police investigated claims of vote-tampering.
The National Party was forced to deny its caucus was holding secret meetings to bolster support for a flag change. Mr Peters alleged that voting papers had been wrongly translated.
Through it all, Mr Key remained optimistic of a change, despite polls showing overwhelming support for the status quo. In the lead-up to the second referendum, he said that the issue was a "once in a lifetime" opportunity.