Abstract Background Few studies report the effectiveness of trivalent inactivated influenza vaccine (TIV) in preventing hospitalisation for influenza-confirmed respiratory infections. Using a prospective surveillance platform, this study reports the first such estimate from a well-defined ethnically diverse population in New Zealand (NZ). Methods A case test-negative design was used to estimate propensity adjusted vaccine effectiveness. Patients with a severe acute respiratory infection (SARI), defined as a patient of any age requiring hospitalisation with a history of a fever or a measured temperature ≥38°C and cough and onset within the past 7 days, admitted to public hospitals in South and Central Auckland were eligible for inclusion in the study. Cases were SARI patients who tested positive for influenza, while non-cases (controls) were SARI patients who tested negative. Results were adjusted for the propensity to be vaccinated and the timing of the influenza season. Results The propensity and season adjusted vaccine effectiveness (VE) was estimated as 39% (95% CI 16;56). The VE point estimate against influenza A (H1N1) was lower than for influenza B or influenza A (H3N2) but confidence intervals were wide and overlapping. Estimated VE was 59% (95% CI 26;77) in patients aged 45–64 years but only 8% (−78;53) in those aged 65 years and above. Conclusion Prospective surveillance for SARI has been successfully established in NZ. This study for the first year, the 2012 influenza season, has shown low to moderate protection by TIV against influenza positive hospitalisation.