The New Zealand Foreign Minister says agreement on Tokelau's further political evolution, and the process to be followed, has been reached during a meeting with the territory's Council for Ongoing Government.
Phil Goff says the Council believes the time is ripe for Tokelau to consider an act of self-determination based on self-government in free association with New Zealand, and his government fully agrees with that.
He says New Zealand's approach has always been to encourage and support it's overseas territories to become as self-reliant as they felt able to be.
The key elements to be included in a Treaty of Free Association were agreed during the meeting.
The next step will be to produce a draft treaty text and annexes for further consideration in both Tokelau and Wellington.
Once the text is agreed, an act of self-determination will be held under United Nations supervision.
The meeting also saw the signing of a Deed establishing an International Trust Fund for Tokelau.
The fund, which already has pledged contributions totalling more than US$5 million, is designed to provide Tokelau with an independent source of revenue, and will be allowed to build up for the first five years at least.