The designer of Red Peak says he's grateful the flag will be included in the referendum, saying it gives "some real choice".
The Government this afternoon adopted a Green Party Bill which would see the alternative flag included in the November referendum.
It will be voted on under urgency in the House tonight.
The flag's designer Aaron Dustin says it is good to see Parliament respond to "a genuine spontaneous groundswell".
He had "no doubt" Red Peak would be the underdog in the process.
"The greatest outcome for me personally is how New Zealand has become engaged with the process of this incredibly important decision," he said.
Green MP Gareth Hughes tried to introduce the Bill into Parliament this afternoon, but was voted down by New Zealand First.
Prime Minister John Key said while he wasn't a fan of the Red Peak, the Government would pick up the Bill to include the flag.
The support for Red Peak spilled over from social media into Parliament with a number of MPs in favour of it.
Since then, the process had reached a deadlock with Labour and National not seeing eye-to-eye on the referendum process and each accusing the other of playing politics with the flag.
Mr Key had said he would be open to urgently changing the law to include Red Peak either as a substitute for one of the existing four, or a fifth option.
He was even open to a one-on-one meeting about the change.
But Labour leader Andrew Little said while the party would support the Red Peak's inclusion, they want a change to the process of the referendum – something Mr Key wouldn't budge on.
"My Bill is about giving New Zealanders a choice following the groundswell of support for the Red Peak flag to be included as an option in the upcoming flag referendum," said Mr Hughes.
"Regardless of whether MPs want to change the flag or not, the referendum is going to go ahead anyway so it may as well include an option that a large number of Kiwis want."
Greens co-leader James Shaw believed the flag change process was "deeply flawed" from the start, but adding the Red Peak would be a pragmatic option.
"It's ridiculous that it's got to this point. [Mr Key] could have just with the flick of the pen included Red Peak as one of the options if he wanted to. Labour has had a go, we've had a go to get it through the process is absurd because he always had that option."
The party says it is pleased the Government has adopted its Bill, thereby breaking the political deadlock.
The Bill won't be seeking to change the process of the two stage referendum and to stop a re-litigation of the process.
Labour leader Andrew Little didn't think the party had been outmanoeuvred by the Greens, saying their objection had been a principled stance.
"We know New Zealanders are concerned about the whole process," he said.
This included not having any designers on the panel, Mr Little said.