The government is confident it will win a court case if tobacco companies challenge plain packaging.

Cabinet has agreed in principle to introduce plain packaging for all tobacco products, following a similar move in Australia where the government is involved in a legal battle.

British American Tobacco New Zealand's Susan Jones said the company would "take every action necessary to protect its intellectual property rights, as would any other business faced with the removal of their brands".

Philip Morris said it would argue against plain packaging, saying it wouldn't reduce smoking rates and would "trigger a variety of adverse consequences and violate numerous international laws and treaties".

Associate Health Minister Tariana Turia says the government is better placed to fight the companies than Australia was.

"We have rules in place that provide protection, Australia didn't have the same rules," she said on Radio New Zealand on Friday.

"If the tobacco companies take the government on, I feel very sure they will not win."

Ms Jones says if the government goes ahead the next logical steps would be to force alcohol, fast food and salty or sugary products to be sold in plain packs as well.

She says plain packets are easier for criminals to counterfeit and the black market would undercut legitimate retailers.

"Perversely, smoking rates will increase as many more young people take it up after gaining greater access to cheap, illegal cigarettes."

There will be a public consultation process before the government makes a final decision on plain packaging.