Tim Southee stood down as New Zealand captain on Wednesday in the wake of their heavy Test series defeat in Sri Lanka and will be replaced by Tom Latham.

Less than two years after inheriting the role from Kane Williamson, veteran seam bowler Southee said it is "best for the team" that he focus on his contribution as a player and wished Latham well.

Opening batsman Latham, who has led the Black Caps in nine Tests, will take charge full-time on the three-Test tour of India starting in Bangalore on October 16.

A New Zealand Cricket statement said Southee would be included in the 15-man tour squad to be named later this week.

Southee said it was an "absolute honour" to lead New Zealand in 14 Tests since December 2022, resulting in six wins, six losses and two draws.

However, New Zealand's results have dipped over the last two years, including a 2-0 mauling from Sri Lanka in the two-Test series in Galle.

"I’ve always tried to put the team first throughout my career and I believe this decision is the best for the team," Southee said in a statement.

"I believe the way I can best serve the team moving forward is focusing on my performances on the field and getting back to my best, to continue taking wickets and helping New Zealand win Test matches."

Right-armer Southee sits second behind Richard Hadlee on New Zealand's Test wicket-taking list, having claimed 382 scalps in 102 matches at an average of 29.9.

Coach Gary Stead acknowledged Southee's contribution as skipper and hoped the right-armer would continue to be a force with the ball.

"It’s not easy giving up something you love, but Tim is a true team-man and he’s made the decision with the team's best interests at heart," Stead said.

"He's one of our greatest ever players and we still very much see him playing a part in our Test side moving forward."

New Zealand are currently without a designated captain in the white ball formats after Williamson stood down in June.

Williamson declined a central contract to pursue offshore Twenty20 league opportunities but, like Southee, he will continue to represent the Black Caps.