New Zealand kingmaker Winston Peters has decided the country's next prime minister will be Labour's Jacinda Ardern.
After more than three weeks of waiting, the New Zealand First leader announced his decision on Thursday.
Ms Ardern revealed she found out she was the new leader at the same time as the rest of New Zealand and described leadership talks as "robust".
"I want to start by saying that it is an absolute honour and a privilege to have the ability as the leader of New Zealand Labour Party to form a government for all New Zealanders," she said after Mr Winston made his announcement.
"Labour has always believed that government should always be a partner for ensuring an economy that works and delivers for all New Zealand. We also believe in a government that looks after its environment and ultimately looks after its people.
"I believe Labour has found true allies to deliver on that."
The incumbent leader also thanked her opponent, Bill English, for his service as prime minister and previously finance minister.
Ms Ardern said Mr English was an "absolute example" of a politician who came into office with the intention "to do good and to serve their country as best as they can".
Mr Winston, who has been offered the position of deputy prime minister and four cabinet positions for his party, said his decision was swayed after he heard from voters that the current leadership was "simply out of touch" with New Zealanders.
"We believe that capitalism must regain its human face. That perception has deeply influenced New Zealand First's negotiations," the New Zealand First leader said.
"We had a choice to make with either National or Labour for a modified status quo or for change.
"In our negotiations, both National and Labour were presented with that opportunity, working together, corroborating together for New Zealand.
"That's why in the end we chose a coalition government of New Zealand First and New Zealand Labour Party."
Mr Winston praised Ms Ardern who inspired and roused Labour supporters into a fever dubbed as 'Jacindamania'.
Ms Ardern said her rival, Bill English, had called her to acknowledge his defeat. Source: AAP
"She exhibited extraordinary talent in the campaign itself from a very hopeless position," he said.
About 40 minutes after he called Ms Ardern to congratulate her on becoming the country's next prime minister, Mr English publically wished her and her government the best as they moved forward.
"We are proud and I'm proud we have, as an outgoing government, left New Zealand in great shape by any international measure," he said.
"It is a more confident country with more aspiration, particularly as it recovered from the financial crisis.
"I wish the new government well in taking this opportunity... to build on the economic strength and also deal with the long-standing issues that New Zealanders want to see dealt with."
Mr English would not confirm if he would continue on as opposition leader, saying: "That's a matter for the next few weeks to discuss among ourselves."
Australia's Prime Minister has reacted to the news on social media, tweeting: "Congratulations @jacindaardern good to talk with you tonight. Look fwd to seeing you soon & building on our two nations' great partnership."
Australia's Opposition Leader Bill Shorten was quick to offer his congratulations to the new prime minister.
"Jacinda brought extraordinary energy to the Labour leadership and campaigned passionately for inclusive, progressive policies, founded on universal Labor values," he said in a statement.
"In electing their third woman to serve as prime minister, New Zealanders have again provided an inspiration for women and girls around the world.
"More than a century after the first Anzacs fought and fell together, Australia and New Zealand’s friendship is stronger than ever.
"My team and I look forward to building and strengthening the connection between our two nations – and I trust the government shares this commitment."
Meanwhile Senator Penny Wong has also congratulated Ms Ardern on her success.
"Labor also thanks outgoing Prime Minister Bill English for his contribution to the strong and warm ties between our two nations," she said.
"The Turnbull Government must now take immediate action to rebuild relations with the incoming New Zealand Government following the Foreign Minister’s attack on Jacinda Ardern’s Labour Party.
"In an attempt to divert attention from the citizenship crisis surrounding Barnaby Joyce, the Foreign Minister publicly declared she would not trust a future New Zealand Labour Government."
While Labour and the Greens have to formally approve the coalition, Ms Ardern will become New Zealand's youngest leader since 1856 and only the third female prime minister of the nation of 4.6 million.
The result will be a bitter blow to outgoing conservative Prime Minister Bill English, who ran an unexpectedly strong campaign to win 44.4 percent of the vote, far higher than Labour's 36 percent.
Ms Ardern is 37 years old and has only led the party since August.
She was elected to parliament in 2008 and joined the Labour Party aged 17.
Ms Ardern worked for former Labour leader Phil Goff's office and credits former prime minister Helen Clark for inspiring her during her three years in the UK as a public servant in the Cabinet Office, and the Department for Business and Enterprise.
The daughter of a veteran New Zealand police officer, she served as an assistant director for the department where she worked on regulatory issues.
Ms Ardern has not yet spoken on her election.
- with AFP
