Prime Minister Helen Clark today unveiled plans to extend and upgrade the six-storey building, just 20 years after it was opened to the public.
Miss Clark said the project would be completed in late 2011, expanding the building opposite Parliament and making heritage collections more accessible to the public.
An additional 4000 square metres of storage and exhibition space would be created.
Without the redevelopment, the library would run out of space within six years.
Miss Clark said the National Library held collections estimated to be worth a billion dollars.
The library was opened in 1987, and at the time there were warnings that it was too small.
"This development is a major milestone in the history of the National Library,'' Miss Clark said.
"A 21st century library for the digital age will be created."