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The 34-year-old beat off two other strong local contenders, Rotorua Lakes High School deputy principal Dr Angela Sharples and Integrated Health Services company director Hugh Kininmonth, for the candidacy.
Mr Coffey said this morning that he was honoured to be selected but it was "never a given".
"I had to compete against some great nominees - that's what democracy is all about and that's what Labour is all about."
Mr Coffey said it was now "game-on in Rotorua".
"This seat is officially up for grabs and I want to take it. I want to be Rotorua's voice in Parliament as Labour delivers on its plans for more local jobs, for the revitalisation of forestry and for the best start for Rotorua's kids and tamariki."
Rotorua is held by Cabinet minister Todd McClay, who won the seat with a 7357 votes majority at the 2011 election.
Mr Coffey was selected at a meeting at Rotorua Primary School yesterday.
At a consecutive meeting, Rawiri Waititi was selected as Labour's candidate for the Waiariki Maori electorate.
Mr Waititi said Maori development was "the name of the game" in the electorate, and Labour would deliver sorely needed good jobs for the region.
"I am a keen and proven advocate for the issues that matter to people and communities in the Waiariki electorate. Preserving our natural taonga is a high priority for me; as is education, which is becoming a big election issues."
Labour president Moira Coatsworth said a crowd of more than 200 party members from the Maori and general electorates attended the meetings.
"They heard inspiring responses to questions put by members, and outstanding speeches from the six nominees for the two electorates.
"Labour's performance in our provinces is crucial to a win in 2014, and candidates of this quality will make all the difference."
This year's general election will be held on September 20.