Jacinda Ardern, leader of the Labour Party, is set to become prime minister after the minority New Zealand First party chose a coalition.

The announcement on Thursday comes one month after the election ended in a stalemate.

The charismatic 37-year old Ardern almost single-handedly dragged Labour back into the race after taking over the party's leadership in August. She won 35.8 percent of the votes, claiming 45 seats.

By comparison, the ruling conservative National Party - led by outgoing Prime Minister Bill English - took 46 percent and 58 seats, three less than the required 61 needed to govern.

New Zealand First won nine seats.

Because there was no clear winner, it was down to Winston Peters of the minority New Zealand First party to choose which two parties would form a coalition government.

Peters sided with the liberals, the Labour Party.

"The people of this country did want change," Peters told reporters. "And we have responded to that."

Ardern is yet to comment and the Green Party is expected to meet to decide whether it backs the Labour-New Zealand First coalition.

Former Prime Minister Julia Gillard and leader of the Labour Party was quick to congratulate Ardern on Twitter.

"Congrats to Jacinda Ardern and the NZ Labour team. After many nail-biting days, a great result!" she wrote on Twitter.