Prime Minister Jacinda Ardern has acknowledged that the Government's attempts to make managed isolation and quarantine (MIQ) fairer failed.
Her comments came after lobby group Grounded Kiwis last week succeeded in their High Court challenge against the Government's state-run quarantine system.
The High Court last Wednesday determined that MIQ did not sufficiently allow individual circumstances to be considered and prioritised where necessary.
Grounded Kiwis focused on the restrictions placed on New Zealand citizens from September 1 to December 17, when Kiwis entering the country needed a voucher for MIQ through an online lobby system or else seek an emergency allocation.
High Court Justice Mallon said it was inevitable that MIQ would operate unjustly in individual cases when demand for places significantly exceeded supply.
"The emergency allocation process as it operated was an inadequate method of seeking to ensure that New Zealanders could return if they were facing unreasonable delays or had a need to return that warranted priority."
On the virtual lobby system, Justice Mallon said: "It was not an appropriate mechanism where demand significantly exceeded supply and those seeking to access that supply had a fundamental right that was potentially impacted to different degrees."
Ardern, speaking after Cabinet met on Monday, said the Government was yet to issue an official response, but acknowledged the High Court's findings.
"I accept the court's findings," Ardern said.
"Ultimately, what they've said is that our reason, our rationale for having those protections at the border, they've accepted that. But what they've looked at is how that operation - the exemption regime that was operating and the way that we implemented some extra tools - whether or not they were right.
"One thing I would acknowledge is that our attempts to make it fairer were found obviously by the court to not have improved the system, and I accept that."
The Government introduced the new lobby system in September as more than 22,000 Kiwis sat in limbo waiting to secure a room to come home. Before then, it was a first-in, first-serve model.
While the new system gave everyone an equal chance of securing a room, there was no hope for those waiting a long time to secure a room. The lobby system picked people at random, so if someone urgently needed a room, the only hope was to apply for a rare emergency exemption.
Ardern accepted how difficult it was for Kiwis trying to get home.
"All the way through, I think it's fair to say we've known and acknowledged that MIQ and even the systems we put in place to manage MIQ, were the best of a range of bad options," she told reporters.
"The moment you're limiting the ability to come into the country, you are going to have a situation where people are put into terrible scenarios and we've seen countless stories of that and all of them have been heartbreaking and incredibly difficult.
"And what I will do is absolutely again acknowledge the impact that each of those circumstances have brought for people.
"But I just want to make sure that we don't delve into the space where the court's still looking to make a declaration, so I imagine we'll have a bit more to say after we've had that declaration issued."
COVID-19 Response Minister Chris Hipkins last week said the Government was "carefully considering" the High Court's findings.
"MIQ was always the least worst option to help keep COVID-19 from entering and spreading in New Zealand, and the court concluded that other options would not sufficiently have achieved the public health objectives the Government had legitimately determined to pursue," Hipkins said.
"We have long acknowledged the difficult trade-offs we've had to make in our COVID-19 response to save lives and the effects of those decisions on all New Zealanders, particularly those living abroad."
MIQ is no longer required of people entering New Zealand and neither is self-isolation. Visa waiver tourists can now enter the country and are required to undergo three rapid antigen tests throughout their stay.
