A new exemption is also being created for the families of temporary visa holders, who had a visa to come to New Zealand but had not arrived before the border closed last year.
To be eligible for these new rules, the family member currently in New Zealand must have more than 12 months remaining on their visa.
They can begin applying for the exemption from April 30.
"We absolutely acknowledge that there will be still some people having to live in difficult situations that cause of the foreclosures," Faafoi said, adding that "we have to draw the line somewhere".
National's immigration spokesperson Erica Stanford said the announcement was "long overdue relief" for split migrant families.
But she said it was a shame the Government only acted after intense and sustained pressure from the Opposition, the media and split migrant family advocates.
"It should not have taken nurses shedding tears on the 6pm news night after night, having been separated from their babies, for the Government to act after it ignored them for months."
Faafoi said this was not why the Government moved and said officials have been working on this policy for some time.
Asked why it took so long, given families were raising these issues in June last year, Faafoi said: "It's about getting the balance right".
"We have to balance the capacity of managed isolation and the health risk of allowing a relatively large number of people to come in from overseas."
Although the announcement will be welcome news for family members of critical workers – of which there are roughly 6000 people who hold that visa category – Faafoi is still in the dark around how many families will be impacted by the rules.
"There are many unknowns here… ascertaining demand and capacity and numbers is a little difficult."
And he also doesn't know how many split migrant families won't be eligible for the new rules – but he guessed it would be "thousands".
He said it might be "few months" before split families can see each other, as those who are eligible still need an MIQ slot and will need to be in managed isolation for two weeks.
But Faafoi said the Government was still working through a number of issues when it comes to issues to do with immigration.
"We will be looking at further adjustments in the weeks and months ahead, including work on immigration policy reforms.
"People have been put in difficult situations because of Covid."