As troops deploy to Iraq, the director of the New Zealand Security Intelligence Service (SIS) says more people are being monitored because of their links to Islamic State.
Rebecca Kitteridge said that included people who were thinking about committing terrorist attacks here.
Ms Kitteridge said she was more worried now about the potential of a terrorist attack here than when she first started her job just 11 months ago.
She said the threat posed by Islamic State is different because it is using social media to encourage people to mount attacks in their home countries.
"I think it's the first time that we've seen a terrorist organisation actually actively trying to recruit people to commit attacks internationally," she said.
"That's the difference now compared to what we've seen before - so there's an active effort to recruit anyone who might be susceptible to this type of propaganda."
The SIS still has a watchlist of 30 to 40 people it is most interested in but she said the number had increased to nearer the top of that range.
Ms Kitteridge said people were of interest to the SIS for a range of different reasons.
"It may be that they are encouraging or inciting others; it could be that they are providing funding or facilitating travel for people who want to travel to Syria or to join Islamic State. It could be that they are actively thinking about doing something within New Zealand."
But Wellington Change Makers Refugees Forum chief executive Tayyaba Khan said she was not aware of Islamic State's social media propaganda prompting interest in New Zealand.
Ms Khan, who works with different organisations within the country's Muslim community, said she was not aware of any social media interaction that could be seen as threatening or concerning.
Professor Ramesh Thakur from the Australian National University in Canberra said governments throughout the western world were playing politics with the threat of terrorism.
"It has allowed some governments to manipulate public opinion and fear … and it has allowed conservative parties to differentiate themselves from their political opponents [accusing them] of being soft on terrorism."
But Ms Kitteridge said she had been careful not to exaggerate the threat and pointed out New Zealand's terror level had only been lifted from very low to low.
Listen to Radio New Zealand political editor Brent Edwards' full investigation into the terror threat on Insight after the 8am news on Sunday on Radio New Zealand National.