The New Zealand government has suspended its funding for Nauru's justice sector.
The government had threatened to cut its aid to Nauru amid concerns about democratic rights and the rule of law in the Pacific island nation.
Foreign Minister Murray McCully says the aid has been put on hold and he will continue to talk with the Nauruan government to try and find a way forward.
"We have not yet been successful at resolving the differences that exist between ourselves and the government of Nauru in relation to the justice sector funding," he told NZ Newswire.
"We have tried to find a pathway forward, but in my view we don't have scope to continue with the justice sector funding when the issues that have caused the criticism are not being addressed by their government."
Last year, the Nauruan government forced the island's then-only judge out of office and suspended most of the opposition from parliament indefinitely.
Opposition MPs have also been arrested and one, Roland Kun, has had his passport cancelled, which prevents him from travelling to New Zealand to visit family members.
Mr McCully says Nauru has previously offered assurances that international concerns about civil and human rights would be responded to.
He says New Zealand remains committed to try to resolve the matter in an "amicable and speedy fashion".
New Zealand provides about $1.2 million a year, paid quarterly, to keep Nauru's justice system going.
New Zealand's other aid to Nauru isn't affected by the decision.