The Government has been criticised for short-changing war veterans with its decision not to pay out a lump sum when they die.
The Labour Party has proposed a change to the Veterans' Support Bill to allow all veterans who served overseas in a conflict zone to receive a special pension.
But Government said it would not support lump sum payments of $5700 to a veteran's families when they died.
Labour veterans' affairs spokesperson Phil Goff said the payment was valued by those on the pension because it relieved their families of funeral expenses.
It was a small but concrete form of thanks to returned service men and women for their service, and the Government's penny-pinching would hurt the small number of World War II and Korean War veterans still alive, Mr Goff said.
But Veterans' Affairs Minister Michael Woodhouse rejected the suggestion the Government was short-changing veterans by note supporting the bill.
"My preference is to make those supports available to veterans when they're alive, and that was the rationale behind the very comprehensive package that the Government announced, including significant increases to war pensions and surviving spouse pensions," Mr Woodhouse said.
Giving the lump-sum payment to all veterans would have cost $40 million over four years, he said.