The Director-General of Health says the new XE COVID variant is something to keep an eye on and warns stricter measures could be introduced if it makes its way to New Zealand.
The new variant, which is potentially 10 percent more transmissible than Omicron, is being monitored by health authorities around the world.
It was first detected in the United Kingdom on January 19 and more than 600 cases have been confirmed in the country since.
XE is recombinant of two other strains, BA.1 - the original strain of Omicron - and BA.2, which is currently circulating in New Zealand.
On the limited data compiled so far, early estimates suggest the new strain is about 10 percent more transmissible than BA.2, but more data is needed.
Speaking with AM on Tuesday, Director General of Health Ashley Bloomfield said the Ministry is watching the new variant closely.
"It's certainly something we need to keep a watching brief on and one of the things about XE is it's actually a combination of the two Omicron sub-variants the BA.1 and BA.2.
"These viruses are constantly exchanging genetic material. So the XE variant seems to be maybe about 10 percent more infectious than this BA.2 variant that we have quite widely spread across the country at the moment."
Bloomfield warned if it makes its way to New Zealand, stricter measures could be needed to make sure hospitals don't get overrun.
"We haven't yet seen it [XE] here in New Zealand. It's been found in a number of countries in Europe but in relatively small numbers so far.
"At the moment what we would want to look at for this variant, but also any new variant really, is what are the characteristics of it that would mean we would have to use some of the measures we've used in the past.
"That includes some of the traffic light measures around stricter indoor limits, of course, we are retaining the use of masks - and I can't emphasise how important that is not just for Omicron but for those other winter illnesses that we know will start to come across the border. So we would look at the characteristics of this variant and then look and see what are the measures we currently have in place and are they sufficient."
The World Health Organization said it will continue to closely monitor and assess the public health risk associated with recombinant variants and would provide further updates as evidence becomes available.
New Zealand is currently in the midst of an Omicron outbreak although numbers have been trending down for several days now.
Despite the drop, Prime Minister Jacinda Ardern kept the country at the red traffic light setting on Monday, saying "we're doing well, but we're still in a large Omicron outbreak".