The mainland population of hoiho - the Yellow-eyed penguin- is at its lowest in 27 years.
The Department of Conservation and the Yellow-eyed Penguin Trust have been counting nests on the South Island's east coast, where about 30 percent of the birds are found.
About 250 pairs are on the nests this year, down from 261 breeding pairs in 2016.
But it found the steepest decline in population was on Codfish Island off the coast of Stewart Island, where only 14 hoiho nests were found this October, down from 24 the previous year.
The Department of Conservation said the population of hoiho was last estimated at 1600 to 1800 breeding pairs, but following the recent count, it was now likely to be less than that.
It says hoiho were facing threats including climate change and disease.
Forest and Bird's chief executive Kevin Hague says more needs to be done to protect the species.
"The decline in hoiho numbers is extremely significant in Whenua Hou and in southern parts of the mainland. Those breeding areas are doing less well and this was a species that really can't afford to do this [poorly]."
The Yellow-eyed Penguin Trust General Manager Sue Murray says the trust had huge concerns for the future of hoiho Codfish Island, given their rapid decline.
"Our focus must be the marine environment where hoiho spend at least half of their life as it is unlikely that terrestrial impacts are a major factor in the decline here," she says.
More than half of the remaining yellow-eyed penguin population breeds on the uninhabited Auckland Islands and Campbell Island, south of Bluff.
The department said monitoring showed the population there appeared to be stable.