New Zealanders stranded overseas by the pandemic have returned home to tears and hugs as the country began dismantling some of the world's toughest Covid-related border restrictions.

Prime Minister Jacinda Ardern said the change was cause for celebration, particularly for the tens of thousands of New Zealanders overseas keen to return home.

“We can't wait to see you,” Ardern told reporters in Wellington. “It's also a huge milestone for our tourism sector and regional economies.”

Until now, Kiwi expats entering the country needed to undergo 10 days of isolation in expensive and over-subscribed hotel accommodation. The requirement was dropped for New Zealanders arriving from Australia on Monday and will be extended to all expatriates on Friday.