The Government is keeping New Zealand's elite SAS troops in Afghanistan, but will reduce numbers by about half when the 12-month extension takes effect in April.
Prime Minister John Key left open the possibility of the extension after a secret visit to Afghanistan last year. The troops were originally due to withdraw in March.
About 70 Special Air Service soldiers are now stationed in Kabul, but that number will be cut to about 35.
Mr Key says the troops asked to stay for another year. He says the SAS believe they have almost completed their work with the Afghan Crisis Response Unit, but want a bit longer.
The Government says the reduced number will still enable the troops to carry out their role of providing mentoring and guidance, and there was no international pressure to keep the SAS in Afghanistan.
New Zealand will retain full command of its deployment, but Mr Key says he can not give further specific detail about this.
A decision on the future of the Provincial Reconstruction Team in Bamyan province will be made in a few months, he says.
The SAS commitment to providing security during the 2011 Rugby World Cup, which begins on 9 May in Auckland, will not be compromised, the Prime Minister says.