Labour finally retakes power after Winston Peters gives Jacinda Ardern his support

Jacinda Ardern says it's an "honour and a privilege" to be able to form a government and both NZ First and the Greens will get ministerial positions.

After nine years in the cold, the Labour Party retakes power after NZ First leader Winston Peters announced on Thursday the party had sided with them after coalition talks.

NZ First will have four ministerial posts and one under-secretary role. The Greens will also have ministerial roles, outside Cabinet, but their agreement with Labour is still to be signed off by the party.

A visibly upset National leader Bill English told media he had already called Ardern to congratulate her on being in a position to form a government.

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Ardern says in her view it will be a "partnership" with Peters and they'll "learn from each other" and there was an extraordinary amount of common ground.

She was happy to learn about her success when the public did and said she enjoyed the "theatre" of it.

From here Labour will meet as a caucus on Friday afternoon and have an election for Cabinet positions.

"Early next week we'll be in a position to sign and release the agreements with both NZ First and the Greens."

Later next week Ardern said she would "release and confirm portfolios more broadly".

'NATURALLY DISAPPOINTED'

Meanwhile, English also found out he lost the role of prime minister at the same time the public heard of Labour's success.

He told media he was proud that New Zealand had been left in great shape and promised the "strongest Opposition party Parliament has seen".

"From here the National Party will group and have a caucus meeting next week."

English said the negotiations with NZ First had been "strong" but clearly they'd "chosen something else".

He said he "naturally disappointed" for him, the party and all those who voted for them.

As for Ardern he said she'd had a "fairly remarkable performance given 12 weeks ago she was the deputy leader of a failing party."

English wouldn't comment on whether he would stick around to lead National from the Opposition backbenches.

'AN HISTORIC MOMENT'

Greens leader James Shaw said the entire election campaign and post-campaign period had been "remarkable".

"This is an historic moment for the Green Party and the movement," he told media on Thursday night.

His party ratified the deal just before 11pm, which included three ministers outside Cabinet and one under-secretary role.

Shaw said there was near-unanimity on the 150-person conference call, with just three people voting against the deal.

He acknowledged both English and the National party for their "many years of service" and said he was looking forward to changing the government under the leadership of Ardern.

CHANGE ON THE HORIZON

In his media conference Peters didn't mention the Greens in the coalition deal. He says he negotiated with Labour and it was for them to sort out the Greens agreement.

The deal was done when Peters got an individual vote from each member of his caucus and the board right before publicly announcing the decision.

Peters has been offered the role of deputy prime minister and other portfolios as part of the negotiations with Labour but he wasn't prepared to say what he would accept.

He also signalled a change of economic direction, including changes to monetary policy in line with policies both NZ First and Labour campaigned on, although he said he hadn't secured a deal along the lines of the Singaporean model, which would have seen the Reserve Bank target the level of the dollar.

He says Ardern had "exhibited extraordinary talent" on the campaign trail and had taken the party from a "hopeless position to a position where they're in office and government today".

"Our perception was the people of this country did want change and we've responded to that."

Peters says the party had to seriously consider a "modified status quo" or a "change" when making its choice following negotiations.

The portfolios offered to NZ First as part of their negotiations with Labour was a "sizeable list" - some were big and some were small but it would be for Ardern to announce those.

While not everyone in NZ First agreed with going with Labour, Peters says it was a strong enough consensus to go ahead.

His message to National was that it was "extraordinarily disappointing in a way to have to make a decision but it was always inevitable" and he praised the way they'd gone about the negotiation talks.

He said it showed MMP in a "new light" and in a way everyone walked away from talks wishing they'd done it more often.

The Māori seats are seemingly safe as Peters says Labour holds those, while voters were "fast on the hip, they were slow on the voting hip" and didn't vote in large enough numbers to see them go.

There were jubilant cheers, including tears and hugs, from the Labour caucus room where MPs have gathered to hear Peters' decision.

Peters isn't answering any questions about whether he's sure the Greens will support the coalition.

He maintains he's never said a bad word "privately or publicly" about Shaw.

Peters says this coalition is between NZ First and Labour and he hasn't seen any agreements Labour have made with the Greens.

The decision comes 26 days after the election and after 11 days of NZ First's formal negotiations with National and Labour.

Both Ardern and Peters were determined to hold off negotiations until the special votes - 15 per cent of the vote - had been counted on October 7.

That proved fruitful for Labour and the Greens who picked up a seat each and put them in the game to negotiate with NZ First.

On election night National won 58 seats but that dropped back to 56 after specials were counted while the Labour-Greens bloc rose from a combined total of 61 seats - the governing threshold - to 63 seats.

In terms of the total party vote percentage - National received 44.4 per cent while the Labour and Greens block gained 43.2 per cent of the vote.

Those numbers closed the gap significantly between the two options for NZ First to govern with.