Voters are being asked to choose between five flag options in a postal referendum that will continue until December 11,2015
The winning design will then go head-to-head with the existing flag in a second referendum to be held in March 2016
Prime Minister John Key has made the flag reform issue a pet project since his conservative government won a third term late last year.
He sees the current flag, which has the Union Jack in the corner, as an anachronism, arguing the country needs a standard "that screams New Zealand".
Key has also expressed frustration that the flag — which features four red stars representing the Southern Cross on a dark blue background — is frequently confused with Australia's.
Four of the five designs in the first referendum feature the fern, New Zealand's unofficial national emblem.
The fifth, dubbed "Red Peak", consists of red, black and blue triangles with a white chevron. It was a late addition to the line up after a social media campaign for its inclusion.
An opinion poll last month predicted a design featuring a white fern on a red and blue background would win the first referendum.
But separate polling suggests the existing flag is likely to decisively win the second referendum in March with about 65 percent of the vote.
Elections NZ said about three million ballot papers were being sent out in the nation of 4.5 million.
Deputy prime minister Bill English urged people to select a flag they felt represented "New Zealand's proud, pioneering past and its exciting, ambitious future."
"This is a once-in-a-lifetime opportunity," he said.
"Very few governments around the world have ever asked their citizens for their views on the design of their national flags."
The present flag was adopted in the early 1900s amid patriotic fervour in New Zealand over sending soldiers to fight in the Anglo-Boer War in South Africa.
Once part of the British Empire, New Zealand is now independent, although Queen Elizabeth II remains head of state.
However, her power is seen as largely symbolic, with some considering the monarchy itself a colonial relic.
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