Prime Minister John Key was called on to defend the ACT Party leader in Parliament on Tuesday, over the police investigation into John Banks' mayoral campaign in 2010.
Police found there was insufficient evidence to prosecute Mr Banks over complaints some donations to his campaign fund had been wrongly declared as anonymous.
It was Mr Banks' first appearance at Parliament since police released their findings.
Mr Banks commented briefly on his way into Parliament for question time on Tuesday afternoon, saying he operated within the law at all times, and had been cleared by police.
He described the police inquiry as extensive.
In the House, Mr Key faced questions about Mr Banks, responding he has confidence in Mr Banks, who is a minister outside Cabinet.
Complied with law - PM
Mr Key remains supportive of Mr Banks.
"I've relied on the assurance he gave me which is that he complied with the law. My reading of ... the police finding is, that's correct - that he complied with the law.
"The law may be very loose as I've said before and the law may well need reforming, and that's something that we'll consider in due course, but I'm comfortable with what he's done."
Labour Party leader David Shearer says his party would be prepared to work with the Government to change the law on campaign finances for local politicians.
Local Government Minister David Carter is considering preliminary advice from officials on the Local Electoral Act.