The Government has abandoned its vexed search for a Chief Technology Officer in favour of "a small group of people" to assist it in mapping policy to guide New Zealand's digital technology environment.

The decision, announced to IT sector stakeholders in an email from Digital Services Minister Megan Woods, says she had concluded after several months of consideration that "it would be difficult to find one person with the skillset to do this role".

Initially proposed by Xero founder Rod Drury and adopted as Labour Party policy, the CTO search became a political and reputational graveyard for those first associated with it.

A first attempt to make an appointment failed after no suitable candidates emerged. Serial tech entrepreneur Derek Handley was then lured back to New Zealand with the role all but confirmed, only to fall foul of a political scandal that cost the then Minister, Clare Curran, her Cabinet position.

In the email, Woods says she took an oral item to Cabinet on December 3, recommending the appointment of a small group of advisers to fulfil the role envisaged by the CTO concept. A full Cabinet paper is expected to be presented in March.

"In recognition of this change the CTO function will need to be renamed," she said.

"Further work will be done on this over summer, including the development of a work programme and I will bring a paper to Cabinet in March 2019 with further detail in order to make final decisions. Please be assured that, in this next stage, we will take into account the views and thoughts you have shared with us."