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New Zealand will implement its own infant formula standard over the next five years, the food safety minister says.
It comes as New Zealand opts out of its joint standard with Australia.
In a statement, Food Safety Minister Andrew Hoggard said Cabinet had decided against adopting the joint standard.
"New Zealand sought a review of the new labelling requirements, but my Australian colleagues were not in a position to support it. As a result, we will now implement a New Zealand standard over the next five years.
"So long as infant formula is safe and the claims on labels are not misleading, consumers should be allowed to make their own informed choices."
Hoggard said the vast majority of the standard was supported but there were two parts of the standard that related to restrictions on labelling that did not fit the New Zealand context.
"The government remains committed to the continued success of the Joint Food System and working towards food standards harmonisation."
Prime Minister Christopher Luxon said the government would continue to work with FSANZ, the Australasian food standards body, aiming for an amendment to be made.
"There's much in the new documentation that we fully agree and fully support in the guidelines, but equally these are pieces, a small part of it, that we cannot support that," he said.
He rejected the suggestion the government had bowed to lobbying from companies which threatened to quit New Zealand over the standards.
"We look at a business that generates $1.8 billion of export sales for New Zealand. We appreciate Australia has a much lower level - I think $300m from memory - of infant formula sales.
"We don't want to constrain our ability to sell our products internationally."
He said it was the fourth time New Zealand had opted out of one of the standards.
Labour leader Chris Hipkins said he agreed with the decision.
"Yes, in this case, I do. And I think it actually highlights one of the risks, again, of this government's approach of saying 'well, we should just adopt Australia's regulatory regime'.
"If you look at other areas where they're saying that they're saying well, for example, medications - if medications are approved in Australia, they should automatically be approved in New Zealand. I don't think regulatory reform in New Zealand should be that simplistic."