A tugboat is now attached to a Singaporean cargo ship off the coast of Farewell Spit at the top of the South Island that issued a mayday call earlier today.
The mayday call has now been lifted.
Maritime New Zealand said its rescue coordination centre was responding to the call from the Shiling, which was made at 11am today.
"This still has the potential to become a rescue situation, so we remain poised to respond," Rescue Coordination Centre New Zealand Operations Manager Mike Clulow said.
The same ship broke down in Wellington Harbour a month ago.
Since the mayday call, conditions on scene have improved and the vessel master has stated he is currently comfortable staying on the vessel, Rescue Coordination Centre New Zealand (RCCNZ) said in a statement.
The vessel, which had just left Wellington made an initial request for help shortly before 8.30am.
Twenty-four crew were on board.
An ocean-going tug was dispatched from Taranaki to tow the vessel to a safe location, and arrived at 4.30pm.
"The vessel is under tow by the Skandi Emerald and is now sitting into wind," Maritime NZ said.
"The mayday call has now been lifted and rescue response assets are being released."
Maritime NZ said the Skandi Emerald would tow the ship to a safe location where it could anchor and be assessed for repair.
"A Maritime New Zealand Incident Response Team which was stood up to manage the incident will continue to monitor the situation."
Earlier, an Air Force C-130 Hercules was circling the ship and an Air Force helicopter was on standby if needed.
Due to its location - 22 nautical miles north north-west of Farewell Spit - there was no risk of it running aground.
The ship broke down in Wellington Harbour on 15 April and was assessed by Maritime NZ.
The Shiling was sailing to Napier when it lost power and drifted outside the shipping channel.
Two tug boats went to the vessel's aid and engineers on board managed to restore some power, so that it could get back to the wharf at Aotea Quay for assessment and repairs.