New Zealand First has pulled out of a committee which will decide how the public votes on the national flag, saying it was an expensive exercise which took attention away from greater priorities.
Leader Winston Peters said this afternoon the flag referendum will "cost us dearly" and take the public's eye off more pressing social and economic challenges.
"A change of flag might need to be considered but now is not the time. Poverty and housing are at crisis level, it's no time for a government to be raising a distraction," Mr Peters said.
His party had rejected the Government's invitation to nominate an MP for a cross-party committee.
Prime Minister John Key said New Zealand First's absence from the committee would not "inhibit the process in any way".