Prime Minister John Key believes police have been exercising good judgment in investigating protest and activist organisations.
Christchurch man Rob Gilchrist is said to have been passing on information to police for a decade about people involved in organisations such as Greenpeace.
Mr Key says police should investigate those believed to present a serious and credible threat, though he would expect police to show judgment and discretion.
Mr Key says Police Minister Judith Collins met Police Commissioner Howard Broad on Monday to seek reassurance that informants were not being misused and was satisfied with his response.
Mr Broad says there is no need to hold an inquiry into the use of police informants in some activist organisations.
Mr Broad says police do follow-up on people they believe pose some risk to the public, and may include members of groups such as Greenpeace.
Opposition leader Phil Goff says the special investigation unit was set up to deal with external threats to New Zealand. It was given extra funding in 2004 when he was the minister of foreign affairs.
Mr Goff says he would not expect it to be involved in spying on a legitimate protest group.