The Government has extended alert level 2.5 in Auckland and level 2 for the rest of the country.
But Prime Minister Jacinda Ardern has signalled an easing of restrictions next week - including bigger gatherings in Auckland and level 1 freedoms for the rest of the country - if cases continue to track down as they have been.
"Within the Auckland cluster is a potential trouble spot," Ardern said, referring to the bereavement sub-cluster associated with Mt Roskill Evangelical Fellowship Church.
"While there is no evidence of significant spread outside of the Auckland cluster, this event does raise the possibility that more people have been exposed within what is already our biggest cluster to date."
Modelling done for the Ministry of Health suggested a 25 per cent chance of cases moving outside of the Auckland region, which supported keeping the rest of the country at level 2, Ardern said.
It only took one person travelling and attending a super-spreader event in another part of the country to spark a surge in cases, she added.
Cabinet will review Auckland's settings on September 21 with a view to increasing gathering limits in Auckland if it is deemed safe, which would come into effect on September 23.
Cabinet will also look at moving the rest of the country to level 1, which would come into effect at 11.59pm on that day - September 21.
The level 1 move has been agreed to in principle but relies of cases tracking as they have been, which would signal diminishing risk of someone carrying Covid-19 from Auckland to a different part of the country.
If that risk remained high enough, protections outside of Auckland would still be needed.
The announcement follows just one Covid case today, who was already in isolation.
Ardern also announced an immediate easing of physical distancing requirements on public transport, based on health advice.
Mask use will continue to be compulsory, but public transport operators including airlines, buses and trains no longer need to have seating restrictions or passenger capacity limits at level 2.
The alert levels - what they mean
Auckland, the centre of the current outbreak, will stay at alert level "2.5", with a stricter social gatherings limit of 10 people except for funerals and tangi, which allow 50 people.
While the rest of the country is at alert level 2, social gatherings of up to 100 people are permitted.
Coalition cracks - Winston speaks out
Today's decision had majority support in Cabinet and followed the advice of director general of health Dr Ashley Bloomfield, Ardern said.
But NZ First leader Winston Peters disagreed and invoked the "Agree to Disagree" provisions.
"The director general of health has stated that the Covid-19 outbreak in Auckland is contained. Additionally, he believes there is a low risk of transmission outside of Auckland," Peters said.
"New Zealand First notes that it will be around 120 days since the last community transmission or reported case – with the sole exception of the four Tokoroa cases, all linked to the Auckland cluster – outside of the Auckland region.
"Despite modelling suggesting a small risk of undetected cases outside Auckland, no evidence has yet emerged that this risk has been realised."
He said the economic costs were taking a toll, and people in the South Island were already in a level 1 mentality.
"Travelling around the South Island has reinforced that people are not observing social distancing in the absence of any registered or real threat of Covid-19 exposure since late April.
"Not because they are against the Government's Covid-19 response, but because they have applied their own 'common sense' test to their risk of exposure to the virus."
Ardern said it wasn't unusual for NZ First ministers to take a different view, and Peters' comments were being made in the context of an election campaign.
While not everyone will agree with today's decision, she said it was important that as many people as possible followed alert level rules.
Act leader David Seymour also disagreed with today's decision.
"The restrictions on the South Island are particularly harsh. There hasn't been any community transition there in the latest outbreak, but they've been unable to go about their daily lives."
"Many in the hospitality business are allowed to open but cannot make money doing so. It is death by two thousand cuts. A thousand last lockdown and another thousand now."
National leader Judith Collins also called for the South Island to be at level 1.
"Why is the South Island still at Level 2 when there hasn't been a case recorded there since the end of May?
"South Islanders have put up with the inconvenience of restricted gatherings, cancelled sports fixtures and half empty businesses. They've had enough.
"While we had a sound response to the pandemic back in March, we're now in danger of using a mallet to crack a nut when it comes to how we handle this disease."
Auckland economy 'bounces back'
Ardern said people had adapted their spending habits to the alert level settings.
"Payment and traffic data in Treasury's latest Weekly Economic Update showed economic activity across the Auckland region and the country bounced back to levels experienced under Alert Level 1, following Auckland's move out of Level 3."
Elimination and keeping people safe from the virus was still New Zealand's strategy, she said.
"Late restrictions, or those lifted too early, have allowed the exponential spread of the virus.
"Our plan is working, but it needs just a little bit more time."
Ardern made the announcement in Dunedin, where the Labour leader is campaigning today, following a teleconference meeting with Cabinet ministers this morning.
She said 36 cases in the community have been identified since Auckland came out of level 3, most of whom were already in isolation when they tested positive.
Over 100,000 tests nationwide in that time had not showed any further transmission around the country, despite the travel freedoms.
In the 14 days at 2.5, there have been new community cases every day except for one, and these cases "can still continue to pose risks", Ardern said.
Getting back to level 1 was a focus, she said, but it had to happen in a sustained way that avoided yo-yoing back into lockdown.
"The last time Cabinet made a decision to move down from level 2 to level 1 we had spent 26 days at level 2, more than two transmission cycles and had gone 17 days without any new cases of Covid-19 in the country," Ardern said.
"So far we have spent 14 days at what we are calling 2.5 in Auckland and have had cases in the community continue to emerge every day bar one. While no new community cases is not a measure in and of itself for moving down levels, as we know more cases will emerge from this clusters tail, these cases can continue to pose risks."
New rules on planes
Ardern said the change in physical distancing on planes and public transit was based on Bloomfield's advice.
The NZ Aviation Coalition says the removal of physical distancing seating requirements on planes was great news for airlines.
It cleared the way for airlines to be able to fill their planes. For travellers this will mean more available seats, more flights and affordable fares to choose from, said co-chair Justin Tighe-Umbers.
''With school holidays coming up so many more Kiwis will now be able to get out around the country, visit loved ones or head on holiday.''
It was a pragmatic decision from the Ministry of Health which recognised that mandatory masks for everyone on board and existing airline measures will keep travellers safe.
''Having seating restrictions removed from alert level 2 means that the domestic network can continue to operate without losing up to three quarters of normal capacity which is impossible for airlines to keep up,'' he said.
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One new case today
Today there was one new case, according to the Health Ministry.
The case is connected to the Botany group, the first case in the group for two weeks.
It is a female child who has been in isolation since August 30 due to being a close contact of a confirmed case.
Today's decision comes as health officials alerted the public to three new locations and dates that a Covid-positive person visited in Auckland before they knew they had the virus.
That has prompted public health experts to warn of the risk of community spread, and they expect alert level settings to remain as they are for some time yet.
Auckland Regional Public Health is warning the 89 people who attended certain classes at Les Mills in Takapuna on September 9 and 10 to stay at home and contact Healthline (0800 358 5453) as soon as possible.
The classes included the Wednesday, September 9, 5.30pm RPM Sprint class and 6.15pm Body Combat class, and the Thursday, September 10, 9.15am Body Combat class.
Others at the gym at the same time but not in those classes are casual contacts and are being asked to get tested.
An ARPHS spokesperson said the Covid-positive person also visited The Warehouse and Countdown in Milford on Thursday, September 10.
ARPHS said the risk to anyone who was at these other locations at the same time as the case is very low.
Yesterday there were two new cases, including a healthcare worker at the Jet Park quarantine facility and a person in managed isolation.
Today the Health Ministry said the Jet Park case has been genomically linked to three cases at the quarantine facility who are linked to the Auckland cluster.
The worker has five household contacts, and all have returned a negative test result.
Nine staff at the Jet Park who are close contacts have all returned a negative result.
All workers at the Jet Park are now being re-tested, and prevention measures including the use of personal protective equipment are being reviewed.
The wider Auckland cluster now has 177 cases, including 55 active cases.
There were 33 cases associated with the Mt Roskill Evangelical Fellowship group, and 15 cases in the bereavement sub-cluster, 98 per cent of whom had been tested by yesterday