The Prime Minister will propose to cabinet that a Royal Commission of Inquiry investigate the deaths of 29 workers at the Pike River coal mine on the West Coast.
John Key made the comment on Television New Zealand's Q&A programme on Sunday morning.
He said "in the end, the future of Pike River and actually underground coal mining in New Zealand rests on this. We can't put people into environments that are dangerous".
Mr Key said there are four underground mines in New Zealand and about 450 people are directly involved in the industry.
Mr Key said he will take a proposal for a three-person commission to the Cabinet on Monday.
He said it will be chaired by a judge, whose name he will be recommending at the Cabinet meeting.
The Prime Minister said the terms of reference will also be determined on Monday but he believes a Royal Commission is appropriate, as it was with the Erebus disaster 30 years ago.
He said this inquiry will be separate from a police inquiry, a Department of Labour inquiry and a coronial inquiry, because a top-level probe is the only way to get to the bottom of what happened.
Mr Key said a Royal Commission has "gravitas and does demonstrate the significance of this national tragedy".
"There are serious questions that need to be answered," he said, vowing the inquiry would leave "no stone unturned" to find the cause of the blast.
Pike River Coal Mine has also said it is conducting an inquiry.
Green Party co-leader Russel Norman, who is in Greymouth, welcomes the move but is urging that a representative of miners be appointed to such a commission.
West Coast Green MP Kevin Hague says the families of the men must also get an invitation to speak to the inquiry.
Grey District Mayor Tony Kokshoorn says a Royal Commission of Inquiry into the loss of life at the Pike River Coal Mine is the best possible outcome from the disaster.
Mr Kokshoorn says he is extremely pleased with the announcement.
He says such an inquiry will ensure everyone that needs to speak about the tragedy and provide an insight can do so independently.
