Churches can resume services and more mourners can attend funerals when the limits on social gatherings are increased to 100 from midday on Friday, Prime Minister Jacinda Ardern says.
However hospitality venues will still need to ensure physical distancing, which meant no dance floors. Venues would still need to seat 100 people from Friday, while private venues would still need to enable physical distancing.
Cabinet will look at whether the country was ready to move to level 1 on June 8, and will mark June 22 - four weeks from today - as the date when ministers will consider the date to move to level 1.
Ardern said that on June 8, Cabinet would check alert level 2 settings again, and on June 22 Cabinet would look at when the country could move to alert level 1.
Ardern said moving to level 1 should be done as quickly as safely possible.
"It's about risk mitigation," Ardern said, and while New Zealand was in a good place, Covid-19 was still showing up in people four weeks later.
Physical distancing obligations would still apply at weddings and funerals, Ardern said.
"We have already opened our bars. Across the ditch, that isn't even on the horizon ... we are moving faster than many."
People planning a Friday night party should keep a list of who was invited.
Today's announcement was an intention to give people notice of the change, but she was also mindful of religious communities that normally congregate on Fridays.
Ardern said the $570 million in payments for people who have lost their jobs due to Covid-19, announced today, were short-term, and was because of a one-in-100 year event.
That was one of the reasons why the level was so much higher than standard welfare payments for jobseekers, she said.
No new cases after moving to level 3
Ardern said that there were no more new Covid cases due to stepping down to level 3, which was "very good news".
That had bucked the trend in other countries, some of which had experienced a second wave of cases.
She said Cabinet had today decided to increase gatherings to 100 from noon this Friday, May 29.
Church services, weddings and funerals will all be able to have 100 people.
It would allow community sport to operate more easily, she said
"Many more gatherings will be able to occur. These changes are good news for business."
Ardern said the Government 's Covid Tracer app had been downloaded over 360,000 times, and just having up-to-date contact details alone was beneficial.
Further work was still ongoing, she said.
Director general of health Dr Ashley Bloomfield said the advice to allow gatherings up to 100 people was based on how well the country had been doing battling Covid-19.
Bloomfield said allowing 100-person gatherings was because of the "very low" level of new Covid-19 cases.
"We felt not only should we move to 100, but we should spend two two-week periods at the full alert level 2, and then actively consider moving to alert level 1."
Ardern on new National Party line-up
The Prime Minister did not offer an opinion on National's new front bench, but she wished them well because a change in leadership was always a challenge.
"They're not the party of Key and English now. They are wishing to rebuild and I wish them all the best."
Ardern said there were no plans for Labour to campaign just for the party vote in the Northland electorate, where NZ First MP Shane Jones will stand.
"It's not something we've done before," she said.
There were no new cases of Covid-19 overnight, and with no new recoveries, the number of active cases remains at 27.
Alert level 2 has been in place for 12 days, and it usually takes about 10 days for changes in alert level behaviour to be reflected in the number of new Covid-19 cases.
Bars opened for the first time under level 2 on Thursday, so any potential spread that might have happened in a crowded bar might not show up in testing data until the end of this week.
Jacinda Ardern has previously said that social gatherings at bars have been the trigger for some of the country's significant clusters, which was why re-opening them under level 2 was phased in.
It was also a reason that she decided to put a temporary 10-person restriction on indoor and outdoor gatherings under level 2, even though she had previously set the limit at 100 people.
The 10-person limit was changed to 50 people for funerals and tangi following public outrage.
Ardern is also expected to outline the criteria for moving to alert level 1, which is the "prepare" stage, meaning the virus is contained in New Zealand.
At the moment, the biggest differences at alert level 1 include no requirement for any physical distancing - with it only being "encouraged" - and no restrictions on gatherings.
Intensive testing and rapid tracing and isolation of contacts would continue, and all schools and workplaces can open.
Border restrictions would continue to minimise the risk of importing Covid-19 cases.
Bloomfield visited Auckland quarantine and managed isolation facilities on Friday.
Anyone arriving in New Zealand must spend at least 14 days in managed isolation or quarantine, and over the weekend, the 10,000th passenger was processed.