The Government has scrapped the limit on outdoor gatherings and revealed the end of vaccine pass use and mandates for some industries from next month.
The number of people allowed to gather inside increases from 100 to 200 under the red light traffic setting.
Masks will continue to be used, but today's move means outdoor concerts, sports and other outdoor events would be able to resume under the red setting.
The traffic light changes will kick in from March 25, Prime Minister Jacinda Ardern said.
Vaccine passes will not longer be required to be used from April 4.
The passes would likely be updated in May or June - when they are due to expire - to require three doses of the vaccine for those workplaces still choosing to require them.
"This is not the end, but in some ways it is also a new beginning," Ardern told reporters.
"Covid is still with us and it will be for some time to come, that's why we are keeping in place our Covid protection framework."
Asked if she could rule out lockdowns in the future, Ardern said there was a lot of work going into looking at future variants.
"There are tools we will keep in our back pockets. The truth is we don't know what the pandemic will produce next."
Ardern didn't close the door on the possibility of future lockdowns, saying the "whole world is reserving the flexibility should we see something dire" in terms of a new and deadlier variant.
She said examples of those tools included reintroducing scanning and vaccine passes. She advised people to not delete the CovidTracer app from their phones.
"There is nothing we are currently experience that would suggest we will need [lockdowns] and that has been the case for a long time."
Ardern said most countries would be reluctant to completely rule out such things, but that was not what was being predicted.
The timing for easing on these restrictions was because there was a clearer picture of when Omicron would peak.
"I consider this to be a cautious moving forward."
It meant removing restrictions that carried least risk, while keeping those such as isolation and mask use which did make a difference,
Asked if school boards could require all teachers to be vaccinated, Ardern said she needed to check.
"But we are no longer requiring a mandate across all of education," she said.
"I consider this to be a cautious moving forward."
It meant removing restrictions that carried least risk, while keeping those such as isolation and mask use which did make a difference,
Asked if school boards could require all teachers to be vaccinated, Ardern said she needed to check.
"But we are no longer requiring a mandate across all of education."
The red light setting that currently applies to New Zealand would be reviewed again on April 4 - and would be reviewed again regularly after that point.
On whether the moves would put vulnerable communities such as Māori at greater risk, Ardern said there remained a focus on lifting vaccination rates in those communities.
Associate Health Minister Ayesha Verrall said the early decision to delay a border opening to allow seniors to get vaccinated was one of the key reasons New Zealand had a low death rate.
Verrall said the chance of global elimination of Omicron looked impossible.
"So Covid is going to be here."
She said there could be a scientific breakthrough, such as a new vaccine that completely halted transmission, but that was not on the horizon as yet.
The Government will not require mandates in education, police or Defence Force workers and those workplaces using them from Monday 4 April.
She said the timing of April 4 to end the mandatory use of vaccine passes and some mandates was based on modelling that the peak should be over by then.
She said the decisions to strip back the mandates were not because of the protesters outside Parliament "but because it was safe to do so."
On the decision to remove outdoor gathering limits and increase indoor limits to 200 at the red setting: "There is no question that this is likely to be welcome news, because we can see from the body of evidence that it is safe to be outside."
Ardern said they had only done things that were "necessary" to get through as safely as possible.
"I know it has been tough but I absolutely stand by the decisions we made." She said they had worked to get vaccination numbers up and protect people.
At the orange setting, more gathering guidance would be coming. Close contact was a high risk, so larger events of more than 500 people would be encouraged to provide more capacity or seating.
On vaccine passes, Ardern said Omicron had changed things since vaccine passes were first introduced.
From 11.59pm on Monday 4 April, vaccine passes will not longer be required to be used.
Some venues and events may still wish to use them, but they will no longer mandated - that could change if a new variant meant they were needed again.
The 180,000 unvaccinated Kiwis are likely to appear to have Covid or catch it in the future, she said, meaning a much higher level of population immunity beyond those who are vaccinated.
"We may need them again, but for post-peak, that will no longer be the case."
On QR codes and scanning, Ardern said there was less need to contact trace as widely. From this weekend, no longer required to scan wherever you go.
However, she said if a new variant did come along and contact tracing was needed, she asked people to be ready to adopt it again,
On vaccine mandates, she said Cabinet had always been cautious about their use.
As vaccination rates increased, they asked David Skegg for advice - that advice was that the case for and against was more finely balanced with high rates of vaccination.
On mandates, those workforces could choose to require vaccination if they wanted.
They would continue to be used for health, aged care and border and MIQ workers - because they either dealt with the more vulnerable or on teh front lines so were at higher risk of new variants.
The Ministry of Health had been asked to assess whether the use of the mandates in the health sector could be narrowed.
Ardern said being highly vaccinated would continue to be critical.
"Two years ago we had very few tools. Now we have plenty, But we cannot do it alone, and it wouldn't work if we did."
Two years of Covid in NZ
Ardern says it is easy to lose sight of how far New Zealand has come - two years ago today there were 36 new cases of Covid-19 and we could only contact trace 50 cases a day.
She said she would always remember one of the community cases on that day - the Wairarapa case - because they could not find a link to any border cases.
"It was the first sign we had community transmission. Within days we were in a nationwide lockdown."
She said in her mind that lockdown was not a hard decision - there was no vaccine, no anti-virals.
"We built our own defences. But those defences were blunt, they were tired and they were temporary."
She said the transition had not been easy, but it had been effective. "Our actions saved thousands of lives."
Economically New Zealand was also holding up, "But while we have been successful it has also been bloody hard."
She said some people have had to give up more than others and most families had confronted difficult discussions about vaccines, mandates or other Covid-19 response elements.
Ardern believed New Zealand was "tired" but still together.
She said the next steps were designed keeping in mind that Covid was here to stay.
For most in the Omicron outbreak, symptoms were mild. Experts believed we had peaked in Auckland now, and that would be reflected in hospitalisations soon. The rest of the country would follow, given Auckland was first to get the outbreak.
The ongoing presence of Covid in the community for the foreseeable future meant tools were still needed to protect the most vulnerable and to try to slow spread.
That meant keeping the traffic light system in place.
