The move could foreshadow similar changes in other developed nations as businesses and residents increasingly move online to communicate and pay bills.
The New Zealand Government on Wednesday announced it was changing its agreement with the postal service effective June 2015.
Instead of delivering mail six days a week, the service will be required to deliver a minimum three days a week in urban areas and five days a week in rural areas, which tend to rely more on mail. About 12 per cent of customers live in rural areas.
New Zealand Post has been lobbying for the change, saying it was barely breaking even on its mail deliveries and would soon begin losing money unless it was allowed to cut back.
Mail volumes in the South Pacific nation of 4.5 million people have dropped by a quarter in the last decade and the decline appears to be accelerating.
"Around the world postal volumes are declining," said Communications Minister Amy Adams. "In New Zealand, this is at a rate of about 8 per cent per annum."
New Zealand Post spokesman John Tulloch said the new agreement was vital in allowing the postal service to remain viable. He said the service hadn't made a final decision on three day a week deliveries, although given the ongoing volume decline it was a strong possibility.
He said that a move to three-day delivery would be accompanied by a new service under which customers could get their letters couriered six days a week for a premium.
In the U.S., the Postal Service has struggled for years with declining mail volumes. The service has tried to end its Saturday mail delivery but has been met with resistance from federal lawmakers.
In a contentious move in Britain, the coalition government this month privatized the country's 500-year-old Royal Mail. It promised six days a week service would continue.