"I know that the thoughts of all New Zealanders will be with Grace's family tonight and I want to reassure both everyone here and overseas that New Zealand police are determined to do everything we can to find her".
Her family have been left "devastated" by the development, Auckland City Police Detective Inspector Scott Beard said.
Beard said the investigation had progressed rapidly since identifying the last sighting of Millane at CityLife hotel in central Auckland at 9.41pm last Saturday, and the police had received a huge amount of information from the public.
The announcement follows a review of CCTV footage, the forensic examination of a hotel where she was last seen on Saturday 1 December, and the discovery of a vehicle.
She was last seen in Auckland on December 1.
Mr Beard said Ms Millane's passport, necklace and watch were still missing and police wanted anyone with information on these or anything else to get in touch on 0800 676 255.
He added the "thoughts of all New Zealanders will be with Grace's family tonight".
When asked if Millane knew the man before the evening she disappeared, Beard would only say that "we don't have any evidence of that at this stage", and wouldn't comment on whether the pair met on Tinder.
Grace Millane’s father David Millane spoke to reporters on Friday Dec. 7 2018
An emotional Beard said it had been a tough time for all involved in the investigation.
"All I can say is that we know they were together from the time at the Sky City Hotel".
New Zealand Police have announced they believe missing British backpacker Grace Millane, 22, has been murdered.
Earlier in the day police released photographs of a necklace and a watch in the hopes of finding her whereabouts.
"I'm not going to speculate on how they met", he said. Her passport is also missing.
He tearfully explained that his daughter has never been out of contact with her family for such a long period of time, usually contacting them on social media.
Det Insp Beard confirmed today that the man being questioned by police on Saturday was the same individual. "Our thoughts are with her family at this very bad time".
Ms Millane, from Essex, was described as a "lovely, outgoing, fun-loving, family-orientated daughter" by her father, David Millane.
In a tearful press conference on Friday, Ms Millane's millionaire father, who has travelled to Auckland, said the "fun-loving" graduate's family are "extremely concerned" for her welfare.