The Prime Minister is being accused of tarnishing New Zealand's reputation as a compassionate country with his attacks on asylum seekers.
In response to reports a boatload of Sri Lankan people might be heading for New Zealand, John Key said they would not be welcome.
The 85 people on the intercepted boat are reported to be adamant they want to be resettled and are refusing to leave their craft moored in the Riau Islands near Sumatra.
People on board had flags and signs referring to New Zealand that prompted Mr Key to state the boat could have been in its way to the country.
But on Tuesday Immigration Minister Jonathan Coleman said that appeared unlikely, as no maps or charts featuring New Zealand have been found.
The Labour Party said Mr Key's statement that asylum seekers are not welcome is a bit harsh, but agrees with the Government's general stance.
But the Green Party said it is shocked by the Prime Minister's attack on vulnerable people and New Zealand's reputation as a compassionate nation will suffer as a result.
NZ must be clear, says Key
John Key says unless New Zealand makes it clear it will reject illegal immigrants, the country is more likely to become the target of people smugglers.
Mr Key said the Sri Lankans were not in New Zealand waters, so have no claim to refugee status.
However, he said he wanted to make it plain the Government would not welcome asylum seekers, nor the people smugglers who arrange the transport, who he said traffic in human misery.
Mr Key said New Zealand accepts up to 750 refugees each year and anyone else would be jumping the queue.
Amnesty International has said that New Zealand has an international legal obligation to assess the claims of asylum seekers who arrive in the country and to provide protection to genuine refugees.
The chief executive of Amnesty International in New Zealand, Patrick Holmes, told Morning Report this country has a small population and plenty of space and can cope with the asylum seekers.
"To have more legitimate, tax-paying, law abiding people here who are well educated, who will contribute to our community and our society - that cannot be a bad thing."
Sri Lankans refusing to leave boat
The Sri Lankans on the intercepted boat are reported to be adamant they want to be resettled in a third country and are refusing to leave their craft moored at the port of Tanjung Pinang in the Riau Islands off Sumatra.
The head of the local immigration office says the group has demanded to speak with officials from the United Nations High Commissioner for Refugees, AAP reports.
Hasan Basri says the people want to go to Australia or Canada if they cannot go to New Zealand. He described the situation as difficult, because authorities cannot force the people off the boat, nor can they let the craft leave.
It is understood the group intercepted on Saturday night bought their vessel in Indonesia.
The stand-off comes almost two years after a similar incident lasting six months and involving 255 Sri Lankan asylum seekers who were stopped while heading to Australia.