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The move comes as the New Zealand Transport Agency launches a trial scheme to improve overseas drivers' behaviour after a series of high-profile fatalities.
The agency will distribute 20,000 ''steering wheel tags'' to vehicle rental firms in the resort.
They feature pictures explaining the country's road rules.
Police previously used the Land Transport Act to forbid ''incompetent'' overseas visitors from driving.
But police hands were tied earlier this year, following legal advice they might be using provisions of the Act incorrectly.
Officers have since been able to forbid someone from driving only by arresting them for an offence such as dangerous driving and imposing a bail condition.
Now, when Queenstown police stopped a driver who was incompetent but had not reached the threshold to be charged, or there was a lack of evidence, they would phone the rental firm and invite them to cancel the contract, Sergeant Keith Newell said.
''It's up to them. We work positively with them. If they want to they can terminate the contract, which does happen, from time to time.
''We'll have a discussion with the rental company. The keys are usually taken from the vehicle and the contract's terminated over the phone to the client.''
Queenstown police used that method when they stopped an Indonesian driver on Shotover St at 11am on Saturday.
Three complaints had been received about the tourist's driving.
The agency has developed the steering wheel tags with the Rental Vehicle Association and tourism and transport safety agencies, under the Government's Visiting Drivers Signature Road Safety Project.
The pictures detail rules such as keeping left, safe speeds, safe overtaking, wearing seatbelts and driver fatigue.
''The aim is to show New Zealand's road safety basics in a simple and easily understood way,'' an agency spokesman said.
The tags have been designed with feedback from a behavioural psychologist specialising in road safety, police and the rental vehicle industry.
Another 20,000 information cards containing the same information as the tags are being supplied for tourism operators and police to hand out.
The agency will evaluate the eight-week trial by surveying self-drive visitors, comparing traffic offence data and information and assessing feedback from rental firms.
The trial will be launched tomorrow at Queenstown Airport.
Tourist drivers were involved in 558 crashes resulting in death or injury in New Zealand in 2013.
They were found to be at fault in about three-quarters of the cases, including 11 fatal accidents.
Police estimate overseas drivers are involved in 25% of South Island crashes, compared with 2% nationwide.
In April, Queenstown's top police officer, Senior Sergeant John Fookes, called for police to be given power to remove drivers deemed incompetent.
Snr Sgt Fookes was speaking at the inquest into the death of motorcyclists Grant John Roberts and Dennis Michael Pederson, killed in 2012 when they collided with a rental car driven by Chinese national Kejia Zheng on State Highway 8 near Tarras.
In June, Dutchman Johannes Jacobus Appelman (52) pleaded guilty in the Christchurch District Court to a triple fatality collision after running a stop sign in Rakaia in a rental vehicle at Queen's Birthday weekend.