Instead the Eden Park stadium will be redeveloped to provide for 60,000 spectators for the World Cup, Sports Minister Trevor Mallard said.

The organising committee for the tournament, Rugby New Zealand 2011 Ltd (RNZ 2011), has welcomed the Government's decision to support the redevelopment of Eden Park.

Mallard has previously described the suburban Eden Park stadium as a "poor second option" for the showcase event and he was a strong supporter of a stadium on the waterfront near Auckland's downtown centre.

"We believe the waterfront option offers the best opportunity for New Zealand to showcase itself during Rugby World Cup 2011 but more importantly to attract major sporting, entertainment and spectator events," he said earlier this month.

But opposition from a regional government body, which believed the waterfront proposal would disrupt the city's busy port, and from many residents scuttled the idea of a new NZ$500m stadium.

New Zealand won the first Rugby World Cup at Eden Park in 1987 and has not been able to repeat the feat at any subsequent tournaments. But the All Blacks are red-hot favourites to win next year's World Cup in France.

RNZ 2011 Chairman Jock Hobbs said from London that the Government's decision to support the redevelopment of Eden Park, with further work pending, was a clear signal for the Tournament and the country.

"I am delighted a decision has been made and while there is further work to do, this is a positive step towards finalising the Auckland venue plans."

He said RNZ 2011 Ltd had supported the vision of a waterfront stadium if it could be delivered on time and subject to appropriate support from other stakeholders. The Tournament company had identified Eden Park as its alternate venue.

"Given the differing views of the Auckland civic authorities and the overall support for Eden Park as an alternative, we believe today's decision is a sound one. We are grateful for the Government's continued support and commitment to delivering a world-class, 60,000-seat stadium to host the Opening Match and the Final of Rugby World Cup 2011."