The Green Party will not be standing in the Wellington electorate of Ōhāriu, in order to give Labour a better shot at winning the seat off United Future's Peter Dunne.
Green Party co-leader James Shaw insists it's not a "dirty deal".
"The Green Party's always thought that the 'cup of tea' arrangements where one party pretends to stand in an electorate while instructing their supporters to vote for another party is intellectually dishonest," he told Newshub.
"This is a more transparent approach, where we're saying 'Look, if you want to change the Government, then Ōhāriu matters and we're simply gonna stand out of the way.'"
The Greens will still campaign strongly for the party vote in the area, Mr Shaw said.
Labour leader Andrew Little says the Greens didn't consult with him before they made the announcement and denied the parties had agreed to a deal.
"The memorandum of understanding means we can talk about electoral accommodations. We had discussions last year about it, and in the end we agreed that we trust each other enough that we'll make our own decisions on standing electorate candidates."
He conceded the decision would be "very helpful to Greg O'Connor".
He says when Labour makes electoral arrangements they're not "a nod and wink arrangement", but rather "very transparent".
Labour selected former Police Association President Greg O'Connor to stand in the Ōhāriu electorate on Sunday.
Mr O'Connor will take on the Internal Affairs Minister, a support partner of the National Government. Mr Dunne has held the seat since 1984 - aside from the period 1993-2008 when the boundaries were redrawn and the electorate was abolished.
A National-United Future arrangement in Ōhāriu gives the party their only seat in Parliament, so a win for Labour would effectively knock the party out.
But Mr Dunne says he saw it coming and he isn't too bothered.
"All the Greens have done is confirm the worst-kept secret of recent months, so no big deal.
"Ōhāriu voters are intelligent – they will work out who is best placed to represent them and their aspirations," he told Newshub.
Earlier this month, Prime Minister Bill English suggested it was likely the electorate deal with the party would continue.
"I think you can expect existing arrangements which have worked would continue to underpin a stable National-led government," he says.
The seat is solidly National Party territory, with the party taking 50.23 percent of the party vote in Ōhāriu in 2014. Despite giving him their electoral vote, just 1.05 percent of residents gave their party vote to United Future.
In 2014, Labour candidate Virginia Anderson took 12,859 votes in Ōhāriu. They were second to Mr Dunne, who won the seat with 13,569 votes. There were 2764 votes for Tane Woodley, the Green Party candidate, and 6120 votes for National Party candidate Brett Hudson.
Mr Shaw said Ōhāriu is a special-case electorate. He said as part of their commitment to Te Tiriti O Waitangi, the Greens would be standing a candidate against Te Ururoa Flavell in Waiariki.