Nurses have voted to reject the latest pay offer from New Zealand's District Health Boards (DHBs).
The NZ Nurses Organisation (NZNO) says urgent mediation is required to avoid strike action.
Industrial services manager Cee Payne says a staffing "crisis" has taken a heavy toll on nurses.
"Nurses and midwives do not trust that their work environment or patient care will improve in the short term. While the revised offer included new funding to address short staffing, concern remains that this may not be enough to make a real difference."
Nurses rejected an offer of a 9 percent pay increase over 15 months, and a $2000 one-off lump sum. Salary limits would increase for registered nurses with more than five years' experience, meaning some could get increases of about 16 percent.
Health Minister David Clark is disappointed nurses rejected the offer.
"The deal that's been rejected today is the largest nurses and midwives have been offered since their historic pay jolt 14 years ago under the last Labour-led government," he said.
"The Government has to balance pay demands across the public sector. We have gone as far as we can in terms of extra Government money, but hopefully the offer can be reconfigured in a way nurses are happy with."
The union says while the latest offer was a substantial improvement on pay, variability over pay increases has created uncertainty.
Nurses have been negotiating a pay increase for a year now. They say their pay has not kept up with other professions like police and teachers
"Whilst the revised offer was substantially improved compared to the previous one on pay for some members, members have rejected this. There may be concern about the variability of the offered pay increases," Ms Payne said.
The union says preparations have begun for providing life preserving services in the event of a strike.
DHB spokesperson Helen Mason said nurses have been made an "excellent offer."
"Patient safety is the DHBs' main priority and while we're working to reach a settlement and avoid disruption to services, we're also working hard to ensure emergency and life preserving services are available if the industrial action goes ahead."
"If we do face strike action… what DHBs will be doing is deferring all non-urgent DHB services, so non-urgent elective and other services to reduce demand on the system and ensure we will be able to deliver services," Ms Mason said.
While the Government is disappointed nurses rejected the offer, the Greens say they should be paid more.
"Nurses are totally professional, so for them to reject an offer of 9 percent over 15 months reveals how undervalued they feel after nine years squeezing by National. We support their call for urgent mediation," co-leader Marama Davidson said.
"The nursing profession has been dominated by women and, like many women-dominated professions such as teachers, has been undervalued and underpaid in comparison to male-dominated professions," Ms Davidson said.
The DHBs said they are likely to recieve notice of strike action on 20 June.