The National Government will decide on which options are to be put up against the MMP voting system when a referendum is held in conjunction with the 2011 general election.
During last year's election campaign, the National Party promised to hold a referendum on the country's voting system and on Tuesday announced the details.
In 1993 New Zealand voted to change the voting system to Mixed Member Proportional representation from First-Past-The-Post. Other options put forward were the Single Transferable Vote, Supplementary Member or Preferential Vote.
There is broad political support for holding a referendum with only the Progressive Party against the idea, saying it is too soon to consider changing the system.
Justice Minister Simon Power says while he will talk to other political parties throughout the process, the Cabinet will have the final say on voting options.
Mr Power says the timeframe for the MMP referendum will ensure that the public is well-informed before they vote.
The referendum will ask two questions. The first will ask voters if they wish to change the voting system from MMP; the second will ask what alternative voting system they would prefer from a list of options.
If a majority of voters opt for a change from MMP, Mr Power says there will be a second referendum at the 2014 general election. This will be a contest between MMP and the alternative voting system that receives the most votes in the first referendum.
If MMP loses the second referendum, the preferred method of voting will be in place for the 2017 general election.
The Elections NZ website says previous referendums on proportional representation were held in 1992 and 1993. They followed a Royal Commission on the Electoral System which recommended in 1986 that New Zealand adopt the German MMP system. The first MMP election was held in 1996.
Reaction to referendum
Labour Party leader Phil Goff supports the referendum. However, he says the question being put to the public needs to be clear and people should be properly informed before voting on the electoral system.
Green Party co-leader Metiria Turei says while it supports a referendum being held alongside the general election, there is no need to reconsider MMP. She says the referendum questions should be written by an independent body.
Progressive Party leader Jim Anderton says it is too soon to consider changing the voting system and MMP should be in place for about 10 elections to give it a decent chance.
Mr Anderton says MMP has only been in place since 1996, whereas First-Past-The-Post was in place for about 150 years.
Peter Shirtcliffe, who led a campaign opposing a change to MMP, believes it is unnecessary to draw out the referendum process over eight years.
He told Checkpoint it would be better to have a single referendum, voted on preferentially in 2011.