Health officials revealed late last night that 10 Auckland school pupils were likely to have contracted the swine flu virus, also known as H1N1, which has been blamed for the death of more than 80 people in Mexico.
Cases have also been reported in New York, California and Kansas.
The World Health Organisation on Saturday activated stage three of its six-stage global influenza plan.
Stage three puts nations on "pandemic alert".
The Rangitoto College pupils, aged 15-18, have tested positive for influenza A after they were part of a 25-strong language group which spent three weeks in Mexico and returned to New Zealand on Saturday.
The tests are being sent to the World Health Organisation laboratory in Melbourne to confirm whether it is swine flu, a subset of influenza A.
It could take days for the results to be returned.
Otago and Southland Medical officer of health Derek Bell told the Otago Daily Times last night that weekend medical and other key staff at Dunedin Hospital had been alerted to the situation, but they would be contacting the rest of the health sector, including general practices, and border controls at international air and sea ports today.
The hospital would be ensuring staff were familiar with pandemic plans and that personal protective equipment was readily available.
They would also remind them of isolation procedures should a patient present with a novel strain of influenza.
While not instructed to do so yet, the response team would be preparing to help trace people who had been on the same flight as the pupils and had travelled on to Otago or Southland.
A "code white" alert had been issued nationally, which means "for your information only" and while no immediate action was required, health services needed to prepare for a potential pandemic.
Dr Bell said he expected the "code white" situation would escalate significantly following a positive influenza results of the Auckland pupils.
Unlike the previous outbreak of avian influenza, which was only contracted directly from birds, the swine influenza appeared to have human-to-human transmission.
"This has got potential to become really serious, very quickly."
People who had recently returned from Mexico or the United States and were suffering from flu-like symptoms should see their GP, ringing first to let them know why they were coming in, he said.
There was no need to panic and people did not need to take any extra precautions.
However, it was a good time to remind people about how infectious influenza was and to help prevent its spread by staying at home if they had the flu.
Health Minister Tony Ryall said last night precautions were being taken on the presumption the Rangitoto College pupils had contracted swine flu.
He said it was "highly likely" they had swine flu.
"I'm informed that none of the affected patients are seriously ill and most in fact seem to be on the road to recovery."
Other pupils and teachers who were on the trip have started to show symptoms. Other passengers on Air New Zealand flight NZ1, which arrived in Auckland from Los Angeles on Saturday, were being contacted and were asked to see their doctor if they developed flu symptoms.
All pupils from the group were being kept in voluntary quarantine at home.
Their families were also included in the quarantine.
One pupil had been admitted to hospital with a respiratory complaint, but it was not believed to be caused by swine flu and the pupil was discharged yesterday.
Deputy director of public health Darren Hunt said the pupils had mild symptoms and one was hospitalised as a precaution.
"I think it is important to recognise the concern that we have and the deaths that have been reported from Mexico.
"At the same time, the cases that have been reported from the United States seem to be relatively mild and there haven't been any deaths reported from the US."
Middlemore Hospital has released Tamiflu to treat the patients and those who have had contact with them.
Its effectiveness on swine flu was not yet confirmed, but reports from Mexico said it was effective, Mr Hunt said.
Dr Bell said the influenza vaccine would not be effective against swine flu.
National co-ordinator of pandemic planning Steve Brazier said the health ministry was "continuing to monitor" the international situation and liaise with the World Health Organisation.
Extra steps would be put in place on planes and in the airport, he said.
Mr Ryall said he was confident the ministry was doing what was appropriate at this stage.
