It's understood coach Ricki Herbert met Reid last night when the All Whites gathered in Dunedin and asked the West Ham defender to captain the side for the foreseeable future. An official announcement is expected later today.
Nelsen recently retired from all football to take over as Toronto FC coach, ending a successful era highlighted by New Zealand's unbeaten run at the 2010 World Cup.
Wellington Phoenix captain Andrew Durante was an option to take over but he is still to get official clearance to play for New Zealand, as was Ipswich defender Tommy Smith.
Smith captained the side in the absence of both Nelsen and Reid for last year's failed Oceania Nations Cup campaign in the Solomon Islands and is expected to be named vice-captain.
Reid, who plays for West Ham in the English Premier League, has taken over from Nelsen as New Zealand's highest-profile player and has captained West Ham on occasion. It's that responsibility which appears to have swayed Herbert's mind.
It will be interesting to see how often Reid plays for the All Whites and he has already been the centre of a club-vs-country tug-of-war. He has played only 13 internationals since making his debut against Australia in the build-up to the 2010 World Cup and has missed 11 of the last 18 All Whites games.
Last year West Ham manager Sam Allardyce was unhappy about his call-up to the All Whites to play two World Cup qualifiers against Tahiti when carrying an injury and Reid also opted out of the Olympics squad to focus on West Ham pre-season training. Reid became an instant hit with New Zealand football fans when he famously scored his only goal in injury time in the All Whites' opening match at the World Cup to snatch a dramatic 1-1 draw with Slovakia.
He previously played for Denmark at youth level before switching allegiance to the country of his birth.
NZF are still waiting for a more definitive ruling from Fifa on Durante's eligibility. The Sydney-born defender recently became a New Zealand citizen but NZF want to be totally sure he is eligible to play for the All Whites.
Fifa initially said they thought Durante was eligible but it was up to NZF to decide whether to play him or not.
It's unlikely he will be risked against New Caledonia if NZF don't hear from Fifa before Friday because they risk having a win overturned if he is found ineligible.
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