Bowel cancer is New Zealand's most commonly registered cancer, and the second most common cause of cancer death.
Survival rates are better for patients in whom the disease is detected at an early stage.
"Once fully implemented, the programme is expected to screen over 700,000 people every two years," Health Minister Jonathan Coleman said.
"We have been working towards a national screening programme for some time. This investment builds on the successful Waitemata DHB bowel screening pilot, which has been running since 2012."
A business case for the bowel screening roll-out will be put to Cabinet shortly.
Dr Coleman has previously said the main constraint on creating a national programme would be having enough colonoscopy staff, but schemes were underway to address this.
Once in place, DHBs will offer people aged 60 to 74 a bowel screening test every two years.
More than 80 per cent of cancers found through the pilot were in those aged 60 to 74.
Last year's Budget extended the Waitemata DHB pilot until December 2017.
The scheme involves people taking a tiny faeces sample at home and sending it in a special container to a laboratory for detection of blood that might indicate cancer or pre-cancer. Those who have a positive result are offered colonoscopy for diagnosis.
"Australia is already a decade ahead of us"
The bowel screening programme promised in the Budget will be a slimmed-down version of what a campaigner were hoping for.
The Waitemata District Health Board's state-funded pilot programme offers screening to people aged 50 to 74.
But the new national programme that will build on the successful Waitemata pilot, will have a narrower age range, 60 to 74, and at first only the Hutt Valley and Wairarapa health districts will join, the rest coming in later.
The patient support group Bowel Cancer NZ, which has been campaigning for a national scheme since 2010, today welcomed the Government's announcement, but said it was "disappointing to hear that the wait is five years away for a full implementation and that those aged 50-59 will miss out.
"International best practice is to screen those aged 50-74 years of age. While we wait for full nationwide implementation across this age range lives will continue to be needlessly lost".
The group however stated that the start of a national screening programme "will begin to turn around our world-worst bowel cancer death rates".
"If New Zealand had the same rates as Australia there would be 350 fewer deaths from bowel cancer each and every year in New Zealand," said the charity's spokeswoman, Sarah Derrett.
"Australia is already a decade ahead of us in introducing a national bowel cancer screening programme."
Health Minister Jonathan Coleman, in announcing the moves towards establishing a national bowel screening programme, said that more than 80 per cent of cancers found through the Waitemata pilot scheme were in those aged 60 to 74. Screening in that age range would maximise the number of cancers found while minimising the cases where problems were not found.
The Herald reported in a cancer series last year that health officials were concerned about a surge of demand for colonoscopy checks following the start of a national screening programme and that ways to reduce this would include restricting the number of health districts in the scheme initially, restricting the age range or to set a high threshold for screening test results to be judged positive for referral to colonoscopy.
Australia aims to offer screening to all aged 50 to 74, but it is not there yet and it is progressively adding selected age groups.
