New Zealand has banned the sale of cigarettes to anyone born after 2008 in a landmark attempt to eradicate smoking.

The legislation, which passed late on Tuesday, will also slash the number of outlets able to sell cigarettes and cut nicotine in cigarettes to non-addictive levels.

"Thousands of people will live longer, healthier lives and the health system will be $5 billion ($A4.7 billion) better off from not needing to treat the illnesses caused by smoking," Associate Health Minister Ayesha Verrall said.

The move to lock out access to people born after January 1, 2009 - practically anyone 14 or younger at the moment - is aimed at creating a Smokefree generation.

NZ's target is fewer than five per cent of adults regularly smoking by 2025.

Prime Minister Jacinda Ardern said the world-first measures were "huge".

"I hope New Zealand feels really proud of what's happening here in parliament, the forward momentum on our Smokefree New Zealand goals and the Smokefree generation," she said.

"That is hugely innovative and a real credit to the minister and the Smokefree community which have been working so hard on on such ideas in this bill."

NZ's eradication goal was set back in 2011 and has made steady progress towards the goal.

A decade ago, 16.4 per cent of Kiwis smoked daily. In 2020, that figure fell to 9.4 per cent and last year, it was eight per cent.

As daily smoking rates are higher among Maori (19.9 per cent) and Pacific peoples (18.2 per cent), Dr Verrall said lowering the smoking rate were important for health equity.

"These measures ... will close the life expectancy gap for Maori women by 25 per cent and by 10 per cent for Maori men," she said.

The Smokefree goal was founded by a National-led government but the opposition centre-right party chose not to support the legislation on Tuesday.

Opposition health spokesman Shane Reti said National supported nicotine reduction, but said the new law would devastate local stores - known as dairies - which relied on income from selling cigarettes.

Under the new law, the number of retailers that can sell cigarettes will drop from about 6000 at present to 600 by the end of 2023.

Dr Reti said the bill would close "corner dairies for the sake of virtue-signalling experimental initiatives".

"Our position on this bill has been to achieve nicotine reduction with the least collateral damage possible. Sounds reasonable, doesn't it?" he said.

Dr Verrall attacked their opposition, saying "traditionally, we've had bipartisan support for Smokefree and National has been prepared in the past to take difficult votes for the Smokefree goal".

"I don't understand how Dr. Reti can rely on his medical credibility as National's health spokesperson anymore."

The Greens and Maori Party also voted for the bill, while ACT was also opposed.

Amid smoking rates falling, vaping use is growing.

The latest figures reveal 8.3 per cent of Kiwi adults vape daily, up from 6.2 per cent the previous year.