Prime Minister Bill English says there is no basis for an inquiry into the claims made in the book Hit & Run.
The book alleges several civilians - including a three-year-old - were either killed or injured in a 2010 Afghanistan raid involving New Zealand special forces.
Mr English said he was briefed about the operation this morning by Chief of Defence Force Lieutenant General Tim Keating and other senior officers.
He said that after viewing footage and seeing other classified information he was convinced the people killed in the raid were insurgents, not civilians.
He said he had not viewed all of the raw footage of the operation, but what he saw - from aircraft involved in the mission - had covered the key parts that were in question.
"After considering [that] briefing, [General Keating's] letter to [Defence Minister] Gerry Brownlee and viewing video footage of the operation, I've concluded there is no basis for ordering an inquiry."
Mr English said the Defence Force had reviewed all the material related to the incident and found the personnel involved took all feasible precautions to minimise civilian casualties and the destruction of property.
"I trust the facts as presented."
If the Defence Force had presented material that was in any way misleading, the government would view that very seriously, Mr English said.
And he said there were also some significant errors made by the authors of the book.
Mr English was asked why no-one outside of the Defence Force had been allowed to view the footage, and whether this process could be seen as independent.
"Well, the CDF [Chief of the Defence Force] is independent, he wasn't involved in the operation. He has access to video of the actual operation itself along with all the planning that went into it, the review afterwards by ISAF [the International Security Assistance Force], and we trust that process."
Mr English said any questions about how the Defence Force could know for sure those killed were not civilians should be put to the Defence Force.
"Should evidence emerge in the future that New Zealand troops acted unlawfully, the government would of course take every step to establish the truth."
He encouraged anyone with information that would back the allegations in the book to come forward and said General Keating had a statutory obligation to consider any new information.
Decision 'the result of military pressure' - Hager
Hit & Run co-author Nicky Hager said the decision was "deeply disappointing".
"When the book came out Jon Stephenson and I emphasised that Bill English had no responsibility for the deeds done in 2010 and so was in a good position to offer aid to the Afghan villages and launch a proper inquiry.
"But he has joined the people trying to hide and dodge over what happened."
"I believe this decision is the result of military pressure on the government," he said. "The tail wagging the dog. That is not good for the country."
He said the issue would "boil and fester" until it was "properly addressed".
In a news conference last week, General Keating confirmed the Defence Force had not seen a full copy of the ISAF report and that the investigators did not go back to the scene of the raid.
He has said the Defence Force did not know the names of the nine insurgents killed in the raid.
It said the troops followed rules of engagement and the only people they could definitively say were killed were insurgents.