Labour leader David Cunliffe says his party will develop more targeted policy using money it saves from dropping two parts of its 2011 tax policy.
A tax-free zone on the first $5000 of earnings and a GST exemption for fresh fruit and vegetables have been withdrawn. They were introduced by a previous leader, Phil Goff.
Mr Cunliffe says abandoning the policies would cut proposed spending by a Labour Government by about $1.5 billion a year.
He told Radio New Zealand's Checkpoint programme on Wednesday that former leader David Shearer had signalled that they were being reviewed and believes there are better ways to help struggling families.
"This decision has been made by me as an incoming leader. We will be withdrawing those policies and we will replace them with more targeted, more effective policies that really address the needs of hard-working New Zealanders."
Mr Cunliffe will outline the party's policy direction at his state of the nation speech on Monday.
Labour will keep its plans for a capital gains tax and a rise in the superannuation age to 67, but Mr Cunliffe says some adjustments will be made.
Prime Minister John Key says the dropped policies wouldn't have been much use in the first place ad the move is more a reflection of the pressure the Labour leader is under.
"Well, it was pretty dumb policy anyway - it wouldn't have worked - and actually there's nothing new. David Cunliffe hasn't done much over summer and he's obviously feeling under pressure now to come out and say a few things.
"The problem is, David Shearer already made those comments when he was the leader. What you can see is the internal tensions now within Labour."