Foreign Minister Winston Peters says New Zealanders have a "clear expectation" that Pacific Island nations will take up the development challenge and do the work needed to lift their citizens out of poverty.

He announced today a Pacific Development Strategy that will deliver $2 billion in aid over eight years.

"This allows us to make a sustainable impact on improving health and education in the Pacific, to address infrastructure gaps and promote economic growth and to improve governance and leadership," he said.

"No one is saying this is going to be easy, nor that New Zealand has all the answers. The challenge is immense, complex and, most of all, long term."

Mr Peters said there was a need to encourage policies and practices which fostered growth and better standards of living.

"It also means preventing corruption, poor governance and conflict which erode development gains."

Mr Peters said economic growth around the region was failing to keep up with population growth.

In some cases, government decision-making was weak in addressing problems and modern practices were not followed.

"Youth unemployment is a growing problem, and basic poverty indicators are far too high," he said.

"The Pacific is at risk of falling victim to all the wasted potential and social economic chaos that poverty brings.

"Unless we want these problems to become our own, New Zealand, as a strong and prosperous neighbour, must try to prevent this happening."

Documents issued with Mr Peters' announcement said NZAID would prioritise assistance to those most at risk of not meeting development goals.

At the top of the list for allocations in 2008/09 are Papua New Guinea, Solomon Islands and Vanuatu.