Prime Minister John Key says New Zealand will donate millions of dollars to the opposition in Libya to help rebuild infrastructure and provide essential services.
Mr Key is calling for Muammar Gaddafi to give up his fight to avoid further bloodshed.
He says the sooner the opposition takes over, the better it will be for Libya and the rest of the world.
Mr Keys says New Zealand has formally recognised the opposition, which says it will hold free elections and respect human rights and freedom of the press.
He says millions of dollars will be made available to it from the existing foreign aid budget.
No peacekeepers to be sent
Foreign Affairs Minister Murray McCully says the Government has no intention of sending peace-keeping troops to Libya.
The Government is sending its ambassador in Egypt to Benghazi to form diplomatic ties with the rebels.
Mr McCully told Radio New Zealand's Morning Report programme he hopes the obvious conclusion in Libya is reached soon without more bloodshed.
He says seven New Zealanders who chose to stay in Libya during the crisis are not seeking any special assistance from the New Zealand Government and are there because they want to be.