Legislation updating the rules governing the Government Communications Security Bill passed its first reading under urgency on Wednesday night by 61 votes to 59 with the support of National, ACT and United Future.
The legislation will allow the agency to spy on New Zealanders on behalf of police, Defence and the Security Intelligence Service.
The legislation also puts a formal obligation on telecommunications companies to alert the GCSB to any matters relevant to national security and to execute interception warrants.
Companies that fail to co-operate with the bureau face fines of up to $500,000, then $50,000 for each day after that.
Communications Minister Amy Adams told Parliament a secure environment is even more important now that the Government and members of the public rely so heavily on digital communications.
However, New Zealand First leader Winston Peters said he could not support the legislation because it was rushed through under urgency.
The Prime Minister had said he was willing to compromise on the legislation to get New Zealand First's support.
Mr Peters said on Thursday the legislation is wide open to abuse.
He told Radio New Zealand's Morning Report programme that changes to existing laws are important because New Zealand is not immune to terrrorist attacks, but they should not be at the expense of the rights of New Zealanders.
Earlier, he said the legislation was written in haste and it should go back to the drafting office before proceeding any further.