The next three Avatar movies, which will cost about $NZ1 billion ($A932.27 million) to produce, will be made in New Zealand.

That had been uncertain until Monday, when the government announced it had struck a deal with Twentieth Century Fox.

The first Avatar movie was made in New Zealand but the sequels had been in doubt because other countries were offering more attractive financial incentives for big productions.

New Zealand’s film industry had been warning that it faced ruin unless the government increased tax rebates for the Hollywood studios.

Economic Development Minister Steven Joyce says the rebate is going to be raised from 15 per cent to 20 per cent for the Avatar movies and others big productions.

“This is excellent news for the New Zealand screen industry,” he said.

“The Avatar sequels will provide hundreds of jobs and thousands of hours of work directly in the screen sector as well as jobs right across the economy.”

Part of the Avatar deal is that at least $NZ500 million ($A466.14 million) will be spent on production activity in New Zealand, most of it on live action shooting and visual effects.

Avatar director James Cameron has bought large farm properties in Wairarapa since the first film was made.