Ardern said the alert change came out of an abundance of caution and would be reviewed every 24 hours.
"Three days should give us enough time to gather further information, undertake large scale testing and establish if there has been wider community transmission," Ardern says.
"I think it is an example of how tricky COVID-19 has always been."
She says it's a "good, timely reminder too, to everyone, please turn on the Bluetooth function and keep scanning".
The precautionary approach had served New Zealand well to date, Ardern says.
Cabinet weighed up many factors and decided moving the country up alert levels was the necessary response, she says.
The prime minister has assured that the vaccine programme would not slow down because of the level changes.
Prada Cup organisers have decided to postpone Wednesday's races.
Cabinet's next decision will be announced tomorrow at 4pm.
Level 3 restrictions for Auckland
Level 3 means Aucklanders will need to stay home. They should also work from home if possible.
If they venture out, Aucklanders must maintain 2m distance.
Schools and early childhood centres will stay open for children of essential workers.
Public venues will close. Gatherings outside of your bubble are prohibited, with exceptions for funerals and weddings which are limited to 10 people. However, Ardern encourages people to postpone these events if possible.
A border will be put in place in Auckland. Those who need to travel through the border can apply for an exemption.
What level 2 means
Level 2 for the rest of the country means businesses and schools remain open, but with social distancing.
People are encouraged to practice good hygiene, keep track of where they have been and stay home if they are unwell.
People are asked to maintain a distance of 2m from others in public spaces and in retail stores.
In other places like workplaces, cafes, restaurants and gyms, people must stay 1m apart.
Masks are mandatory on public transport and encouraged where physical distancing is not possible.
Gatherings, including weddings and funerals, are limited to 100 people.