Cabinet has approved lowering the blood alcohol limit from 80mg per 100ml of blood to 50mg for drivers over 20.
The legislation to change the law will have its first reading in Parliament before Christmas, Transport Minister Gerry Brownlee said.
"Alcohol impairment is a major cause of road accidents in New Zealand, with an average of 61 fatalities, 244 serious injuries, and 761 minor injuries every year caused by at-fault drivers who have been drinking,'' he said.
"The social cost of these injuries and fatalities is $446 million - a huge sum in a country of our size.''
A two-year review of the impact of a 30mg reduction in the legal limit suggested 3.4 lives would be saved and 64 injury-causing crashes avoided each year, equated to savings of $200 million in social costs over 10 years.