New Zealand will shut down in 48 hours to save tens of thousands of lives, Prime Minister Jacinda Ardern has announced.

The most severe response, level 4 of the country's Covid-19 threat system, was announced by Ardern on Monday afternoon after the Ministry of Health confirmed it believed two cases of coronavirus had come about from community transmission.

New Zealand is immediately moving to level 3 before moving to level 4 at 11.59pm on Wednesday.

KEVIN STENT/STUFF Ardern on her way into the press conference.

Schools will be closed, non-essential businesses will shut, and travel around the country will be "severely limited".

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KATHRYN GEORGE/STUFF The most severe response, level 4 of the country's Covid-19 threat system, was announced by Ardern on Monday afternoon.

All New Zealanders who don't work in essential services are instructed to stay at home until public health officials can grapple with the virus - expected to be four weeks.

Ardern said the measures would save tens of thousands of lives, despite the unprecedented social and economic disruption it will cause.

"We are fortunate to still be some way behind the majority of overseas countries in terms of cases, but the trajectory is clear. Act now, or risk the virus taking hold as it has elsewhere."

HAGEN HOPKINS/GETTY IMAGES Prime Minister Jacinda Ardern.

"We currently have 102 cases, but so did Italy once. Now the virus has overwhelmed their health system and hundreds of people are dying every day."

If the transmission continues unimpeded, the number of cases could double every five days, she said.

"Right now we have a window of opportunity ... We can stop the spread by staying at home and reducing contact. Now is the time to act," she said.

Under level 4, essential businesses - supermarkets, pharmacies, and medical clinics - will continue to operate.

There will be rationing of supplies and buildings will be requisitioned by the government as needed.

Finance Minister Grant Robertson said Cabinet had agreed to raise the wage subsidy scheme by removing the $150,000 cap for businesses - meaning every employee who is unable to work from home and is non-essential will be covered.

These subsidies are paid to employers in order to keep workers on even as they cannot work because of the shutdown.

This will roughly increase the amount spent on the scheme to $9.1b.

The Government is negotiating with banks to provide temporary support for mortgage holders and a business finance guarantee scheme.

The would also be a rent freeze, and "no-cause" terminations of tenancy agreements would be ended.

Education Minister Chris Hipkins said that only the children of essential workers will attend school on Tuesday, before schools close for all on Wednesday.

The education ministry was working hard to ensure students could distance learn, but many children would have limited access to the internet.

The school holidays will be brought forward to be captured by the four week lockdown period, he said.

Hipkins, also leader of the House, said the government's legislative program would be on hold with Parliament adjourning after an extraordinary session on Wednesday.

Outgoing police commissioner Mike Bush is heading up a command centre dealing with Covid-19.

He said the defence force could play a role in enforcing the new rules.

"Hopefully we will never need the defence force but you always want to be prepared. They are quite willing to work alongside us while we are out in the communities."

"When we start in the communities it is about education and encouragement. We don't want to get to a place where we have to enforce restrictions but we will, if required."

Earlier on Monday, another 36 new cases of coronavirus in New Zealand were confirmed.

New Zealand's total number of confirmed cases is now 102. Monday's confirmed number of cases was the highest one-day rise in the number of Covid-19 patients to date.

While almost all of the cases are either recent arrivals from overseas or have had close contact with travellers two cannot be linked to travel.

This has led to the Ministry treating these two cases in Auckland and the Wairarapa as "community transmission" - the first such cases in New Zealand.

Of the two cases suspected of being transmitted in the community, one - in Auckland - is new, and the other is a case in Wairarapa reported on Sunday.

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