New Zealand have dropped Shannon Frizell from the first Test squad to play Australia after the All Blacks loose forward appeared in court Tuesday charged with assault over a nightclub incident in the southern city of Dunedin.

Frizell, who has played 15 Tests and runs out for the Dunedin-based Otago Highlanders, faced two charges of assaulting a woman and one of common assault on 9 May.

The case was adjourned until September so Frizell could complete the requirements of diversion - a scheme used by police in New Zealand to help first offenders avoid a conviction.

To qualify for diversion, an accused must accept responsibility and police set conditions, which may include a letter of apology to the victims and compensation.

Following the court appearance, New Zealand Rugby held a misconduct hearing which resulted in Frizell being suspended for two matches.

They took into account that he had already been stood down for one Highlanders' Super Rugby match after the incident and added he would also miss the first Bledisloe Cup Test against the Wallabies in Auckland on 7 August.

"We are disappointed at this incident and the subsequent assault charges for Shannon. Given the seriousness of this incident, we felt that a two-match stand down was warranted," NZR's head of professional rugby and performance, Chris Lendrum, said.

Outside court, Frizell, 27, apologised to the victims and said he would "try to do everything I can to restore people's faith in me. I already have put a plan in place with counsellors to help me address areas I want to work on."

The first Bledisloe Cup Test was confirmed Tuesday when the Wallabies were granted permission to enter the country despite New Zealand having closed the quarantine-free travel bubble with Australia, which is wrestling with a Covid-19 outbreak.

New Zealand Sports Minister Grant Robertson said the Wallabies had been granted entry under a clause allowing exemptions for events that have a significant economic impact.

"This is important economically," Robertson said, putting a €10-12m value on All Blacks Tests.

"Test rugby between the All Blacks and the Wallabies is keenly anticipated by New Zealanders, and I welcome the decision to allow the Australian team to travel given the game was less than two weeks away when trans-Tasman travel was suspended."

Negotiations are continuing between rugby authorities in New Zealand and Australia over the fate of the remaining two matches, which are set to be played in Perth and then Wellington.

Wallabies coach Dave Rennie has indicated that the Wellington Test may be played second and both teams will then travel to Perth to limit the amount of travel.