Prime Minister Jacinda Ardern has said trans-Tasman travel to some states of Australia could happen before the end of the year, under a new 'hot spot' approach.
Quarantine-free travel to and from Australia - alongside all other international travel - has been off-limits since March, when New Zealand's border was closed due to Covid-19.
A trans-Tasman bubble has been discussed for months, and it was initially hoped it could be operating now, for the September school holidays.
However, Victoria's outbreak, which has now topped more than 20,000 cases, put the plans on ice.
Ardern told Breakfast "it is possible" we could see state by state bubbles before Christmas, under a new 'hot spot' approach being developed by Australia.
Under the potential plan, Australians would be able to travel interstate and even to New Zealand, if a region was not deemed a hot spot.
The definition of a hot spot is still being worked on, but there was speculation it could mean a region or state with more than 30 cases of community transmission within ten days.
Previously Australia wanted a whole of country approach, which Ardern said was slowing things down.
"We did suggest it would be up to them, but if they did move state by state, that might free things up a little sooner," Ardern said.
When asked specifically if state bubbles could be open before Christmas, Ardern replied "It is possible, what we'd need to be assured of is when Australia is saying they have a hotspot [in one state] that the border around that hotspot means that people aren't able to travel into the states where we are engaging with, with trans-Tasman travel.
"We've got a strategy of having a Covid-free country, that's our ongoing goal and way of operating, and other states have actually operated like that too, like Queensland," Ardern said.
Queensland has had sporadic cases of community transmission, although Western Australia has gone more than five months without community cases.
Australia's Minister of Trade and Tourism, Simon Birmingham, talked up the possibility of quarantine free Tasman travel at the weekend, but said it could be initially limited to and from the South Island because of the recent Auckland cluster.
Mr Birmingham told the Today Show on Nine that he hoped Australians would be able to travel freely to New Zealand by the end of the year.
"We're working hard to make sure every safety precaution and measure is in place through our airports, our border protections, screening processes, to make sure people can travel safely between Australia and New Zealand without risk of encountering other air travellers that may be coming in from higher risk countries," Birmingham said.
Birmingham suggested travel could initially be one way, with Kiwis being able to go to Australia without having to quarantine when they arrive.
But he said that would only be permitted for residents of the South Island, due to the Auckland August cluster in the North Island.
"Ultimately, whether New Zealand opens up to Australia will be a matter for New Zealand, but we are working to make sure we're ready and hopefully we can see those steps taken this year," Birmingham told Nine.
It came after Prime Minister Scott Morrison said on Friday that a new travel bubble – allowing trips to and from Australia without Covid-19 quarantine – was a possibility, but with a few amendments from original discussions.
Morrison suggested the trans-Tasman bubble could successfully operate between regions with no known Covid-19 outbreaks.
"If there's no Covid in Christchurch, and there's no Covid in Queensland, then there's no reason both of them can't come to Sydney," he said.
But he repeatedly stressed that New Zealand would have to make the call on how its borders were managed.