Cabinet ministers have convened a special virtual meeting this afternoon to discuss the trans-Tasman bubble, including a potential pause of the entire arrangement.
The Prime Minister's office said the meeting had been planned for "several days" given the developing situation in Australia.
Any announcements are not expected until tomorrow, but RNZ understands a range of possibilities are being canvassed, including a total pause.
The meeting is being held virtually as it is one of Parliament's recess weeks, meaning ministers are spread across the country.
The news comes as Australia grapples to get control of its Covid-19 outbreak.
Quarantine-free travel is currently paused for three states: Victoria, New South Wales and South Australia.
At yesterday's vaccine update, Covid-19 Response Minister Chris Hipkins told reporters the trans-Tasman arrangements were under "constant review", but also that the pauses would be reviewed on 27 July.
"We will continue to make adjustments and make decisions as we need to, to make sure that we are reducing, as much as is possible, the risk to New Zealand."
Asked directly whether the entire bubble should be closed, Hipkins said he had nothing further to add.
"Every day we get updates from Australia, and we share our updates with them, and we keep everything under review."
New South Wales recorded 124 new Covid-19 cases in the last 24 hours, its worst day yet in the outbreak, and officials are warning the outbreak will get worse.
Victoria has recorded 26 new local cases, but only two were infectious in the community. South Australia has also reported two new cases.
Queensland, which reported no new cases overnight, also announced it would close its border to people coming from NSW from 1am tomorrow.
Currently only New Zealanders returning from New South Wales have to undergo a 14-day stay in managed isolation.
All other returnees must get a negative pre-departure test 72 hours before their flight and monitor their symptoms. Only people who are normally resident in New Zealand are allowed to return.