The Prime Minister has revealed that lockdown lite will be extended in Auckland for four more days until 11:59pm on Sunday, August 30.
The extra days would allow Auckland to move to level 2 "and stay down", Jacinda Ardern said, which would be worth it if it meant avoiding future yo-yoing between alert levels.
From Monday, August 31, the whole country including Auckland will be at level 2 but it will be phased in for Auckland.
Gatherings for Aucklanders will be restricted to 10 people at level 2, while a 50-person limit would be in place for funerals and tangi.
Those settings will be in place for a week and Cabinet will review them on Sunday, September 6.
Ardern said Cabinet considered moving the rest of the country to level 1, but asking police at Auckland's boundaries to ask everyone leaving if they were travelling to a large gathering was "just not workable".
Masks mandatory on public transport
From Monday, everyone will be required to wear masks on public transport for level 2 and above.
"If Covid can spread on a bus, and we know masks make a difference, let's wear masks," Ardern said.
The order to require masks was still being put together, and who would be liable for breaking the order and whether exemptions would apply - including for children or people with medical conditions - was still being worked through.
But Ardern said everyone taking public transport needed to take responsibility for wearing a face mask.
Director general of health Ashley Bloomfield said his advice was that it was a "line-call" about mandating face coverings at level 2, and Cabinet had decided to go through with it.
Asked about not mandating the use of masks earlier, Ardern said lessons had been learned as more information about Covid-19 came to light, and the Government had moved with new evidence.
The Government had also learned from last time about restrictions for funerals and tangi, she added.
The Government had placed a 10-person limit on these gatherings the last time the country went to level 2, but pushed it up to 50 people after strong public blow-back.
How long at alert level 2?
Ardern said the review of alert level settings on September 6 was genuine and she didn't want to give any expectations - for people organising large events, for example - about whether there might be a staged move to level 1.
She said the wage subsidy extension was better than targeted financial assistance for hospitality businesses, and many that were previously not eligible might now be with the extra four days at level 3.
Auckland Mayor disappointed
Auckland Mayor Phil Goff said he is disappointed that level 3 was being extended for four days, but he believes Aucklanders will understand why the decision has been made.
"This will be difficult for people whose jobs and businesses are most affected by Level 3 restrictions. However, the advice given by medical experts is clear; if we ease up on restrictions too early, we risk a further resurgence and losing the benefits we gained from ensuring the virus is contained," Goff said.
"I want to thank Aucklanders for their patience and sacrifice to date, I know it hasn't been easy, but we need to continue doing what we know works."
More confidence about perimeter of the outbreak needed
Cases had emerged where they were infected before level 3 came into force, Ardern said, including on bus journeys between strangers, in churches, and in a retail shop.
The perimeter of the cluster needed to be understood and defined, and that confidence can be built over the course of the rest of the week.
The next seven days will see thousands of tests and Ardern hoped that people will continue to play their part by washing their hands, staying home if sick, and using the Covid Tracer app.
Targeted testing over the coming week will continue in South and West Auckland, including in supermarkets.
She said the tail of the cluster will be long and cases will "keep coming" for a while.
"But we can manage that.
"If it weren't for level 3 this cluster would be exponential, of that I have no doubt."
Asked about what responsibility the Government took for the outbreak, she said the work was continuing into trying to find the source.
She said exponential growth outside of the cluster and cases unconnected to the link could jeopardise moving to level 2 next week.
New Zealand would not have the cluster under control without people showing up to be tested, she said.
"It has saved lives. Without those members of our community willing to be tested, lives would have been lost. We don't have any estimates on how large that would have been."
She singled out the Pacific community and thanked them for being tested.
She stood by the elimination strategy as being the best for the long-term benefit of New Zealand.
Heavy lockdowns didn't have to be used every time a case emerged, she added.
"There is no denying that the price Aucklanders are currently paying are the greatest. We know it's been tough. I know there are many who've found it harder this time."
Covid-19 is now the world's reality and that reality was "hard to accept".
"If anyone country knows how to bounce back, it is us. If it feels hard right now, that's because it is.
"In a world where 2020 has frankly been terrible, we are strong, we have been kind, and we are doing really well."
The factors Cabinet has considered today include the number of new cases, the types of cases including those unconnected to the current cluster, the capacity of the contact-tracing regime and the health system, economic impacts and the levels of public compliance.
Ardern said enormous effort had gone into the past two weeks, with 100,000 tests in Auckland and 194,000 tests in total.
Contact-tracing's gold standard had been reached - 80 per cent of close contacts isolated within 48 hours of a positive test result since August 12.
Today there were nine new cases - eight confirmed and one probable - including eight connected to the South Auckland cluster and one in managed isolation and quarantine (MIQ).
That brings the number of cases in the cluster to 101 - now New Zealand's biggest - the number of cases still under investigation to three, and with 19 cases in MIQ, the total number of active cases to 123.
One of the three cases still under investigation had been asymptomatic, and all indications were it was an old case. They had arrived in country in June and hadn't tested positive during their stay in MIQ,
One had symptoms and went to the North Shore ED on Friday night, and the third case is the Rydges maintenance worker.
Bloomfield said earlier today that avoiding level 3 or 4 in response to future outbreaks should be manageable.
"Now that we know our testing can ramp up quickly, we know our contact-tracing is effective, we've got much wider use of the NZ Covid Tracer app, there's a range of other measures being put in place.
"When we do get another case - it's likely to happen again - we should be able to manage it within an alert level 1 or 2 setting. And that is exactly the aim."
He said elimination was still the strategy,
"We want to quickly stamp out any outbreaks. The aim would be to be able to do that no higher than a level 2 setting."
Yesterday there were 4589 tests. Sundays usually have lower traffic to testing stations.
Of 2300 close contacts identified, 2249 have been contacted.
New Zealand had a string of lower daily case numbers the last time we moved from level 3 to 2, which was in May, but tools such as contact tracing and genome sequencing have greatly improved since then.