The Government is to proceed with legislation that will allow the Government Security Communications Bureau to legally spy on New Zealanders.
A report released last week called into question the legality of 56 spying operations involving 88 individuals since 2003.
A law change in that year prohibited the agency from spying on New Zealand citizens or permanent residents.
But the report by Cabinet Secretary Rebecca Kitteridge found that the GCSB believed that when it was assisting domestic agencies that rule didn't apply.
Prime Minister John Key said on Monday clarifying the law is the responsible thing to do, otherwise he would be leaving New Zealand's national security open to threat.
However, he did not believe there was any need for further inquiries into the matter.
"What there's actually a need for are the proposals in this legislation. We are effectively putting in law what Labour believed they had the authority to do when they were the Government in 2003."
Mr Key said the oversight of the agency would also be widened and strengthened.
"We intend to make it clear the GCSB can undertake activities on behalf of other named agencies, where those agencies can lawfully undertake those activities. This includes the other agencies' lawful investigations of New Zealanders."
The Prime Minister said he would like to have the legislation passed before the end of this year.
An inquiry is also being launched into who leaked a copy of the Kitteridge report to media ahead of its public release.