The Wellington region, including Wairarapa and Kapiti Coast, will move to alert level 2 from 6pm today until 11.59pm Sunday.
Covid-19 Response Minister Chris Hipkins said there will be limits on gathering sizes and no more than 100 people could now meet at one time.
The change in alert levels comes after a Sydney man travelled to the region while infected with the Covid-19 Delta variant.
Face masks were now compulsory on public transport and people were encouraged to wear them while waiting for transport, he said.
Hipkins also encouraged people to wear masks where social distancing was not possible.
Schools would stay open, as would ECE centres.
Hospitality outlets could open but needed to apply the three S's - seated, separate, and having a single server.
The move to level 2 will prohibit crowds at tonight's Wellington Sports Awards, the Maori All Blacks v Samoa rugby match at Sky Stadium on Saturday, as well as home matches for the Saints basketballers and Pulse netballers on Sunday, Newstalk ZB reports.
"We've always had plans in place for situations like this and that is what we're working through now," Hipkins said.
Contact tracers were working "at pace", he said.
Hipkins said this case was a reminder of the need to use the Covid tracer app and to have the Bluetooth function turned on.
If people had been in the Wellington region over the weekend, they needed to take the alert level restrictions with them.
If someone had been in Wellington over the weekend and was now in Christchurch, for example, they should not go to big gatherings, Hipkins said.
Asked why there as no lockdown, Hipkins said the Government was taking a "cautious approach" and monitoring the situation.
MPs, Ministers would not be participating in gatherings larger than 100, regardless of where they were in the country.
Parliament will continue to sit today but be observing level 2 restrictions.
Four close contacts of the man were notified last night and put into isolation and tested.
Two results are back so far - both are negative.
Director general of health Ashley Bloomfield said based on the timeline of symptom onset and CT value of the test, the virus was contracted prior to the traveller's visit to New Zealand.
The traveller works in a healthcare workplace near the Bondi Junction - an area linked to the current outbreak in Sydney.
Hipkins said there would from time to time be cases of Covid-19 that "pop up" in New Zealand or Australia. Hipkins said NSW authorities responded "very quickly" to the cases which emerged last week.
If New Zealand hit pause each time there was a case, the transtasman bubble would be pointless, Hipkins said.
Asked if the traveller should have been on a flight in the first place, Bloomfield said people in NSW shouldn't have travelled to New Zealand if they were in locations of interest linked to the Sydney outbreak.
The man's workplace had not been identified as a location of interest at that point, Bloomfield said.
Asked if the travel bubble should have been paused earlier, Hipkins said the Government made the decision when the number of cases in Sydney surged yesterday.
The first time Bloomfield advised a pause on the transtasman bubble was yesterday evening.
The tipping point was a primary school-aged child testing positive given at the time there wasn't a clear link to the rest of the Sydney cluster, he said.
Hipkins received a text message about the positive case around 8:30pm and he called counterparts in NSW.
The traveller and someone who travelled with them used the Covid tracer app while in Wellington, Bloomfield said.
All the locations of interest linked to the traveller were now public.
Hipkins said officials got information out about locations of interest as soon they could.
He denied the release of that information had been "sluggish".
New Zealand health officials spoken to the Australian Covid case into the early hours of this morning, Bloomfield said.
Bloomfield said experts had to follow a process about the right instructions to give people in the locations of interest.
Some specific locations within Wellington Airport would be released when CCTV would be reviewed.
Four contacts linked to the Australian traveller had been isolating - two in Palmerston North and two in Tauranga.
Whilst there are close contacts in Palmerston North and Tauranga, there are no locations of interest in either of these cities.
The contract tracing team are tracking down 58 passengers who were on the Sydney flight the man was on.
The people on that flight were close contacts and required to isolate for 14 days and take a day five and day 12 test.
Extra testing capacity was being added to sites across Wellington. GPs and urgent care centres would also do testing.
Asked about whether the traveller's visit to the pharmacy in Wellington was being scrutinised more closely, Bloomfield said the traveller only began experiencing symptoms from 3am Monday.
Bloomfield didn't directly answer the question when asked if the traveller used buses or took taxis to get around Wellington.
Asked why officials didn't alert Wellingtonians who were in the locations of interest via the Covid tracer app straight away this morning, Bloomfield said it was a "matter of getting the balance right".
Hipkins said he hadn't had a chance to review the speed of the release of the locations of interest.
Teams had been working through the night to get the information together and the case and contacts were interviewed overnight and this morning, Hipkins said.
"We get information out as quickly as we possibly can," Hipkins said.
Bloomfield said they tried to contact locations of interest before that information was made public.
Bloomfield didn't directly answer a question about whether all travellers from Australia should be required to download the Covid tracer app before leaving the airport.
No decisions had been made about the Prime Minister's upcoming visit to Australia.
The Government will not be proceeding with the Dawn Raids apology planned for this Saturday in Auckland, Hipkins said.
That would be rescheduled, he said.
Meanwhile Te Papa's chief executive has confirmed she herself is a close contact of the Sydney traveller.
Courtney Johnston is now isolating at home because she was at the Surrealist art exhibition on Saturday that the Covid-infected tourist visited.
A Fulton Hogan worker and a parking warden were reportedly approaching people waiting to get a Covid-19 test in central Wellington and Bloomfield said DHBs could contract extra people to help communicate with those in a queue.
Bloomfield was confident that arrangement was appropriate and left nurses free to test people.
Bloomfield also revealed we have administered 1 million doses of the Pfizer vaccine. DHBs were 7.5 per cent ahead of plan, he said.
Supply issues were impacting the speed of the rollout and bigger deliveries of the vaccine were expected shortly, Hipkins said.
Asked if this meant New Zealand needed to ramp up the rollout of the Covid-19 jab, Hipkins said "the vaccine rollout is going as fast as possible".
Hipkins said the Government was not considering delaying Kiwis' second Covid jabs in order to make sure more people had their first jab.
Asked about whether or not New Zealand could hit 70,000 Covid-19 jabs a day, Hipkins said he was confident every Kiwi would be offered a jab this year.
Hipkins said the man had received one dose of the AstraZeneca vaccine and his partner, who he travelled with, is awaiting her Covid-19 test results.
It's not known whether she was also vaccinated.
Sixteen potential exposure sites have so far been released. They are:
* Qantas Flight QF163 Sydney to Wellington, arrival at Wellington Airport, 12.05am, Saturday
* Rydges Hotel, Featherston St, 12am, Saturday to 9.10am, Monday
* Prince Barbers, Featherston Street, 8.45am to 1pm, Saturday
* Unichem Wellington Pharmacy, Lambton Quay, 10.38am-11.48am, Saturday
* Te Papa Tongarewa, 3.05pm-5.45pm, Saturday
* Te Papa Tongarewa - Exhibition Surrealist Art: Masterpieces from Museum Boijmans Van Beuningen, 4pm-5.45pm, Saturday
* 4 Kings Bar at Jack Hacketts - Toilets only, Inglewood Place, 8.45pm, Saturday
* Jack Hackett's Bar, 8.45pm-12am Saturday
* Floridita's restaurant, 161 Cuba St, Te Aro, 12.45pm to 4pm, Saturday
* Highwater Eatery, 54 Cuba St, 5.45pm to 9.30pm, Saturday
* Pickle & Pie cafe, 2 Lombard St, 9.45am to 11.37am, Sunday
* The Weta Cave shop, 1 Weka St, Miramar, 11.10am to 12.30pm, Sunday
* The Lido cafe, 81 Victoria Street, Te Aro, 1pm to 2.45pm, Sunday
* Unity Books, 57 Willis St, 1.50pm to 3.05pm, Sunday
* Countdown Cable Lane, 280/284 Lambton Quay, 6pm to 7.15pm, Sunday
* One Red Dog, 56 Customhouse Quay, 7pm to 9pm, Sunday
People at those locations at specified times should isolate, get a test five days after potential exposure and stay at home until getting a negative result.
Dr Ashley Bloomfield and Chris Hipkins will give an update on the situation at 1pm.