A New Zealand government minister said on Monday he has resigned from his post for putting his hand on a staff member's upper arm during an "animated" discussion.

The country's minister for commerce and consumer affairs, Andrew Bayly, told reporters his behavior towards the staff member had been "overbearing".

"For that, I am deeply sorry," he said.

"I took the discussion too far, and I placed a hand on their upper arm, which was inappropriate."

A complaint had been lodged about his behavior in last week's incident, the minister said, declining to give further details.

It is the second apology Bayly has offered for his ministerial conduct after his visit to a New Zealand business last October turned sour.

A worker wrote a letter of complaint at the time saying the minister appeared to have been drinking, swore and called him a "loser" repeatedly, even forming an "L" with his fingers on his forehead. 

Bayly sent two apologies in reply, saying he "misread the moment" and meant his comments in a "light-hearted manner".

He reassured the worker: "I was not intoxicated when we met."

Despite stepping down as a minister for his latest encounter, Bayly said he would remain a member of parliament and looked forward to serving his electorate.

The resignation comes as Prime Minister Christopher Luxon's conservative government, which took office in November 2023, sags in the polls with voters hit by the rising cost of living.

Luxon said the arm-handling incident happened on February 18 and he had accepted Bayly's resignation on Friday, delaying the announcement to give the minister time to speak to his family and staff.

"I think that's been pretty quick to move as fast as we have within the week. It's pretty impressive," he told reporters.

The New Zealand leader said Bayly told him he felt his actions "fell well short of the expectations he sets for himself".

Luxon said he appreciated that Bayly wanted to continue to be a lawmaker and thanked him for doing an "exceptional job" as minister.

Asked if Bayly might one day return to a ministerial post, he told reporters: "Never say never."

Bayly was replaced as commerce minister by Scott Simpson, who had been the senior whip responsible for party discipline in parliament.