Primary school teachers and principals have voted to reject the latest offer from the Ministry of Education.
The New Zealand Educational Institute (NZEI) is locked in a year-long pay dispute with the Education Ministry.
It said today the latest offer to settle their collective agreements was "overwhelmingly rejected".
Union president Lynda Stuart said significant disruption could happen next term if the government did not focus on finding a solution quickly.
Paid union meetings will happen early next month and if there's no progress by then the proposal is to vote on strike action on 29 May, the union said.
Between 15 May and the strike date teachers would also work to rule - meaning only working within 8am to 5pm Monday through Friday.
Prime Minister Jacinda Ardern said the goverment was doing as much as it could at the moment, and most teachers would have got more in the latest pay offer than during the entire term of the previous government.
Education was only one of many areas with significant, long-term challenges competing for government funding, Ms Ardern said.
"I understand the frustration of teachers and principals, I do, because there are a large number of needs in education," she said.
"But from the government's perspective we're also facing a range of competing needs in areas that I know teachers care about too.
"We're striving for the same things. All of the concerns teachers are raising, I have sympathy for. But ultimately we're the ones that are also having to make spending decisions in other areas. We are doing as much as we can right now for the education sector."
The Ministry of Education said it had hoped to settle the pay deal, but was now open for fresh talks.
"The $700m, which is available to settle the collective agreement, is just one part of the investment that the government has and will continue to make into the education system," said deputy secretary Ellen MacGregor-Reid.
"There is a substantial programme of work underway, already $500m has gone into learning support."
Teachers and principals voted last week on offers the NZEI said differ little from those they have previously rejected. The government has insisted it will not increase the value of its offers any further.
Ms Stuart said the vote, announced late this morning, represented a clear message to the government that they needed to get serious about pay and conditions.
"Our teachers and our principals do not want to go on strike. They want to be in their classrooms and in their schools doing what they do best, which is working with children of this nature. Striking is not within the sorts of things we love to do."
She said money needed to be put on offer to make teaching a viable career choice.
Russell School principal Sose Annandale said work to rule meant schoolwork might not get marked, and various extra curricular activities, such as sport or hui, would not go ahead.
"The hardest thing for me will be actually encouraging the teachers to put their laptops down and not work at night, because most of us actually do a lot of work at night, including myself, because it's long hours. I mean I average maybe 60 hours a week."
In November, they went on strike after turning down an improved pay offer from the Ministry of Education.
That had included an increase to most teachers' pay by 9 percent over three years, a new top of the pay scale from 2020, an a $500 lump sum for union members only. It increased spending by $129 million, taking the offer to almost $700 million over four years.
The Employment Relations Authority has slammed the teachers union's pay demands as "totally unrealistic" and has urged teachers to take the government's offer.
Last month, secondary school teacherscalled off a nation-wide strike due to the Christchurch terror attacks and said it would decide its next steps after the April school holidays.