The Government is scrapping the limit on outdoor gatherings from Friday and has revealed the end of vaccine pass use and mandates for some industries from next month.
The number of people allowed to gather inside increases from 100 to 200 under the changes to the red light traffic setting.
Masks will continue to be used, but today's move means outdoor concerts, sports and other outdoor events would be able to resume under the red setting from this weekend.
The traffic light changes will kick in from 11.59pm this Friday, Prime Minister Jacinda Ardern said.
Vaccine passes will no longer be required to be used from 11.59pm on April 4.
The Government is also ending the controversial vaccine mandates in education, Police or Defence Force workers from April 4.
"This is not the end, but in some ways it is also a new beginning," Ardern told reporters.
"Covid is still with us and it will be for some time to come, that's why we are keeping in place our Covid protection framework."
The future of lockdowns
Asked if she could rule out lockdowns in the future, Ardern said there was a lot of work going into looking at future variants.
"There are tools we will keep in our back pockets. The truth is we don't know what the pandemic will produce next."
Ardern didn't close the door on the possibility of future lockdowns, saying the "whole world is reserving the flexibility should we see something dire" in terms of a new and deadlier variant.
"There is nothing we are currently experiencing that would suggest we will need [lockdowns] and that has been the case for a long time."
She said examples of those tools included reintroducing scanning and vaccine passes. She advised people to not delete the CovidTracer app from their phones.
Ardern said most countries would be reluctant to completely rule out such things, but that was not what was being predicted.
The timing for easing on these restrictions was because there was a clearer picture of when Omicron would peak.
"I consider this to be a cautious moving forward."
It meant removing restrictions that carried least risk, while keeping those such as isolation and mask use which did make a difference.
Vaccine passes would likely be updated in May or June - when they are due to expire - to require three doses of the vaccine for those workplaces still choosing to require them.
Ardern said she expected that businesses that broke the rules while the vaccine passes were in place would continue to face investigations and WorkSafe could enforce the fines for breaches.
What it means for schools: ''Cautious moving forward'
Asked if school boards could require all teachers to be vaccinated, Ardern said she needed to check.
"But we are no longer requiring a mandate across all of education," she said.
On removing the teachers' mandate and whether it would put immuno-compromised children at risk, Ardern said the vaccination rate and immunity from having had Covid-19 had made it a safer decision and mask use and improved ventilation systems in schools were also safety measures.
On greater access to N95 and P2 masks, Ardern said there was yet to be more discussion about whether they needed to step up Government provision of them, and surgical masks were also a good option.
Associate Health Minister Ayesha Verrall said there was a concern for children regarding winter and respiratory diseases including the flu RSV.
Some of the measures being used for Covid - such as masks - would also help with other viruses.
Ardern said New Zealand had suffered very little flu in the past two winters, and the country was part of a research group on the impact once the borders re-opening.
Red light setting review on April 4
The red light setting that currently applies to New Zealand would be reviewed again on April 4 - and would be reviewed again regularly after that point.
On whether the moves would put vulnerable communities such as Māori at greater risk, Ardern said there remained a focus on lifting vaccination rates in those communities.
Verrall said the early decision to delay a border opening to allow seniors to get vaccinated was one of the key reasons New Zealand had a low death rate.
Verrall said the chance of global elimination of Omicron looked impossible.
"So Covid is going to be here."
She said there could be a scientific breakthrough, such as a new vaccine that completely halted transmission, but that was not on the horizon as yet.
Ardern said the timing of April 4 to end the mandatory use of vaccine passes and some mandates was based on modelling that the peak should be over by then.
The decisions to strip back the mandates were not because of the protesters outside Parliament "but because it was safe to do so".
Mandate refusers could get their jobs back
Asked if people who lose their jobs because of mandates would now get their jobs back, Ardern said some probably would - especially those who had been on extended leave.
The Defence Force would go through its own processes, because there were often vaccine requirements for international deployments.
For businesses or organisations that wanted to maintain mandates, Ardern said they would update the advice but businesses needed to undertake their own health and safety checks to decide whether they needed to keep them in place.
On the decision to remove outdoor gathering limits and increase indoor limits to 200 at the red setting: "There is no question that this is likely to be welcome news, because we can see from the body of evidence that it is safe to be outside."
Ardern said they had only done things that were "necessary" to get through as safely as possible.
"I know it has been tough but I absolutely stand by the decisions we made."
She said they had worked to get vaccination numbers up and protect people.
At the orange setting, more gathering guidance would be coming. Close contact was a high risk, so larger events of more than 500 people would be encouraged to provide more capacity or seating.
On vaccine passes, Ardern said Omicron had changed things since vaccine passes were first introduced.
From 11.59pm on Monday, April 4, vaccine passes will no longer be required to be used.
Some venues and events may still wish to use them, but they will no longer mandated - that could change if a new variant meant they were needed again.
The 180,000 unvaccinated Kiwis are likely to appear to have Covid or catch it in the future, she said, meaning a much higher level of population immunity beyond those who are vaccinated.
"We may need them again, but for post-peak, that will no longer be the case."
On QR codes and scanning, Ardern said there was less need to contact trace as widely. From this weekend, no longer required to scan wherever you go.
However, she said if a new variant did come along and contact tracing was needed, she asked people to be ready to adopt it again,
On vaccine mandates, she said Cabinet had always been cautious about their use.
As vaccination rates increased, they asked David Skegg for advice - that advice was that the case for and against was more finely balanced with high rates of vaccination.
On mandates, those workforces could choose to require vaccination if they wanted.
They would continue to be used for health, aged care and border and MIQ workers - because they either dealt with the more vulnerable or on the front lines so were at higher risk of new variants.
The Ministry of Health had been asked to assess whether the use of the mandates in the health sector could be narrowed.
Ardern said being highly vaccinated would continue to be critical.
"Two years ago we had very few tools. Now we have plenty, But we cannot do it alone, and it wouldn't work if we did."
Two years of Covid in NZ
Ardern says it is easy to lose sight of how far New Zealand has come - two years ago today there were 36 new cases of Covid-19 and we could only contact trace 50 cases a day.
She said she would always remember one of the community cases on that day - the Wairarapa case - because they could not find a link to any border cases.
"It was the first sign we had community transmission. Within days we were in a nationwide lockdown."
She said in her mind that lockdown was not a hard decision - there was no vaccine, no anti-virals.
"We built our own defences. But those defences were blunt ... and they were temporary."
She said the transition had not been easy, but it had been effective. "Our actions saved thousands of lives."
Economically New Zealand was also holding up, "But while we have been successful it has also been bloody hard."
She said some people have had to give up more than others and most families had confronted difficult discussions about vaccines, mandates or other Covid-19 response elements.
Ardern believed New Zealand was "tired" but still together.
She said the next steps were designed keeping in mind that Covid was here to stay.
For most in the Omicron outbreak, symptoms were mild. Experts believed we had peaked in Auckland now, and that would be reflected in hospitalisations soon. The rest of the country would follow, given Auckland was first to get the outbreak.
The ongoing presence of Covid in the community for the foreseeable future meant tools were still needed to protect the most vulnerable and to try to slow the spread.
That meant keeping the traffic light system in place.
National and Act have both been pushing the Government to go harder with loosening Covid restrictions.
National last week called on the Government to immediately drop all scanning requirements for businesses and to scrap vaccine passes for all but large indoor events.
The party also wants to get rid of all vaccine mandates for young people aged under 18, and move to a five-day isolation period.
Once the border reopens to Australians on April 13, National wanted the traffic light system gone for good, and an end to pre-departure testing, along with the eventual phasing out of all vaccine mandates, with health workers to be phased out last.
Party Covid-19 response spokesman Chris Bishop said they welcomed today's announcements but wanted it to go further.
"The end of the vaccine pass system does call into question the relevancy of the Government's Traffic Light Framework, which has vaccine passes at its heart.
"The Government would be better to ditch the whole thing and create some simple rules around masks and perhaps venue limits, rather than persist with a complicated colour-code system that has never been used properly and that barely anyone understands.
"This smacks of a Government that is simply unwilling to cede control and let New Zealanders get on with things."
Act also wanted the traffic light system gone, along with scanning and tracing, and vaccine requirements.
Leader David Seymour said the delay to bringing in the new rules made no sense as people should be able to undergo regular testing as an alternative to being vaccinated.
The 200-person indoor gathering limit with seating rules would also be of "little relief for the hospitality sector", he said.
The Greens, meanwhile, have said Covid protection measures should only be relaxed once the Omicron peak was well past, and instead of a fixation on a date, the focus should be on better protecting vulnerable people.
Covid-19 response spokesman Teanau Tuiono said the party did not support today's measures, and called for better protections for vulnerable communities.
"Stronger protections in schools, equitable vaccination rates, and free masks are essential for keeping our most at-risk communities safe. They are also necessary to protect our overwhelmed health system.
"It is also far too premature to drop vaccine mandates for education, especially in early childhood education where under-5s cannot be vaccinated."
Longer-term they called on the Government to improve indoor air quality and plan to improve wellbeing and address poverty.
John Key blasts Govt's 'dog and pony' show
Cabinet made the decisions on changing Covid response rules on Monday but Ardern said at the time more work was needed on them before they could be unveiled. She also said they would not take effect immediately.
Earlier today former Prime Minister Sir John Key criticised the Government's "dog and pony show", in the way it is drawing out critical announcements on the future of New Zealand's Covid response.
Key described the Government's motives as trying to "get the maximum theatre" by announcing its Cabinet decisions two days later "as if it's like completely independent to the lives of New Zealanders".
Earlier today Ardern told Newstalk ZB there was nothing untoward in the delay, and it was simply because Cabinet often took different decisions than advised and so needed to check there wouldn't be any "unintended consequences".
Regulations also needed to be redrafted and they had to ensure helplines and other assistance was ready.
Ardern said Covid was "here to stay", with continuing impacts on the health system, so that needed to be managed while allowing hospitals to resume doing what they needed to do.
Speaking to Radio Tarana about today's announcement, Ardern said the traffic light system would "stay with us for a while".
"Covid is not going anywhere. We still need to be able to manage it. So we had a look at the way it is working and where can make some safe changes."
15 deaths yesterday, 20,907 cases reported
There were 15 deaths, 1016 people in hospital and 20,907 community Covid cases reported on Tuesday, with health chief Dr Ashley Bloomfield saying case numbers had peaked in Auckland.
With high vaccination rates and many of the unvaccinated now having had Covid-19, Ardern has said the Government could look to safely scale back some of the requirements around vaccine passes and mandates and overall settings.
Experts meanwhile have warned not to relax restrictions too fast.
A blog post published by Otago University experts Professor Nick Wilson, Dr Jennifer Summers and Professor Michael Baker said while case numbers had likely peaked, caution was needed in relaxing restrictions to avoid further waves, as had been seen in Australia.
They called for more efforts to increase vaccination levels for children and booster coverage and said mandates should be kept for certain industries interacting with vulnerable people and vaccine passes changed to include a booster dose.
While two doses and/or prior infection was shown to be effective at reducing transmissibility of Delta, it was less effective with Omicron.
Mask use should continue in key indoor settings and ventilation improved where possible.