The drought is predicted to cost the economy $1 billion as hard-hit farmers struggle to feed stock.
Federated Farmers Manawatu-Rangitkei president Andrew Hoggard, who runs a dairy farm near Feilding, said the declaration was a welcome recognition by the Government of their struggle.
"When everyone recognises you're having a hard time you probably feel a little bit better about yourself, whereas if there's not that recognition there's probably people out there that think it's their fault and they just need to harden up. This shows that they've done what they can but they're dealing with something that's beyond their control."
The hardest hit were sheep and beef farmers in the hill country, with many running perilously low on stock drinking water. Some were trucking water in, but some farms were too inaccessible so farmers were being forced to open all their gates, allowing stock to wander and search for water on their own.
The other key issue was a lack of feed supplements, compounded by the fact the entire North Island was affected.
"Normally in a drought you'll find maybe the east coast is doing alright and the west coast is struggling so they'll be able to buy feed from them or send stock over there, but those options don't really exist with this drought."
Mr Guy said it had become clear that nearly all farmers in every part of the North Island are facing very difficult dry conditions.
Extra Government funding will be available to Rural Support Trusts who work closely with farmers, providing support and guidance.
There will also be rural assistance payments - equivalent to the unemployment benefit - available from Work and Income to those in extreme hardship.
"Many rural people can be reluctant to ask for help, but it is important for them to know that support is available," Mr Guy said.
"This is a difficult time for rural families and they need to know that the Government and all New Zealanders are behind them.
"Some rain is forecast this weekend which is welcome news. However we will need more than this to help prepare for the winter and set up for next spring.
"Parts of the South Island are also very dry, in particular the Grey and Buller districts. We are keeping a close watch on all further regions."
Farmer should contact their accountants or the IRD if they need help or flexibility with making tax payments, Mr Guy said. Standard hardship assistance is available from Work and Income.
Federated Farmers president Bruce Wills said he could not recall a time when the entire North Island had been in drought.
He said Government financial assistance would be a drop in the ocean compared to what farmers had lost or were going to lose but the emotional support the declaration offered was very welcome.
"These are people that are suffering through no fault of their own, through an act of God. We have real concerns about the emotional stress and difficulties that many families are coping with and that's the predominant benefit that comes from a drought declaration.
"It doesn't mean any money directly to farmers, it's just about having some competent, expert people out there who are able to be at the end of the phone, or to sit around the kitchen table and talk it through."
Climate scientist Jim Salinger said yesterday the North Island had not experienced a drought so severe for 70 years, and warned that such events could become more frequent.
Wellington is estimated to have just 18 days of water left while Aucklanders are being warned about the impact of the city's driest summer in 50 years.
Cyclone Sandra is expected to bring rain to most places this weekend - the first decent fall since mid-January - with showers to follow on Monday.
People throughout the North Island are being asked to conserve water.
