A group of care and support workers have successfully sued the government in the High Court over the vaccine mandate.
They sought a judicial review after losing thousands of dollars in payments.
The workers, who mostly look after family members they live with, had their payments cut because they were not vaccinated against Covid-19.
Justice Van Bohemen's judgment said the decision by then Covid-19 Response Minister Chris Hipkins to extend the mandate to the family carers was invalid.
The Crown now agrees there was an error in decision making.
The group's lawyer, Matthew Hague, said as a result of the mandate, care and support workers could not receive financial support to care for family members because of the alleged risk posed by the carer being near the person being cared for.
"However, in this case carers were near their family member anyway, whether or not financial support is provided."
The families could ask the government to reimburse them, Hague said.
Hipkins, who is now prime minister, needed to apologise to the support workers who had desperately needed financial support withheld, he said.
Caregiver Jude Bignell said it was a win for "common sense".