Jacinda Ardern has announced a travel bubble with Australia could be in place from the first quarter of 2021.
Speaking on Monday at her post-Cabinet press conference, the Prime Minister said Cabinet had agreed in principle to establish the bubble next year.
"It is our intention to name a date... in the New Year, once remaining details are locked down," Ardern said.
"Our hard and early approach broke the back of the virus and despite flare-ups since... the vast bulk of New Zealanders have enjoyed freedoms for the majority of the year that few other countries have."
Ardern added that the establishment of the bubble would be dependent on several factors, including sign-off from Australia's Cabinet and no change in each country's COVID-19 situation.
Issues still to be worked through include contingency plans for an outbreak in Australia and how passengers from 'safe zones' will be separated from those travelling from COVID-19 affected countries.
COVID-19 Response Minister Chris Hipkins will be travelling to Auckland Airport on Tuesday to examine its arrangements.
In a statement, Air New Zealand said the announcement is a "great step forward".
"Our teams are busy preparing for recommencing quarantine-free travel. Safety is obviously a big priority for our airline, and we've been working closely with governments, relevant agencies and airports on what is required to keep our customers and staff safe once travel opens up," said CEO Greg Foran.
"We appreciate people are enthusiastic about travel, and we can assure customers that as soon as it is viable, Air New Zealand will be ready."
New Zealand is also working on a travel bubble with the Cook Islands, with Ardern announcing on the weekend an agreement had been reached between the two countries to open a quarantine-free travel bubble by the end of March 2021.
On Monday, Ardern said that a one-way travel system with the Cook Islands would be created before the Australian travel bubble.