An inquiry is to be held into allegations a New Zealand-led raid in Afghanistan in 2010 led to civilian deaths.
Hit and Run, by investigative journalists Nicky Hager and Jon Stephenson, alleged six civilians were killed and 15 injured in a raid on two Afghan villages in 2010 by New Zealand's elite soldiers
The authors of the book claim that the government then tried to cover up the raid and have always maintained that an inquiry should be held.
Previous Prime Minister Bill English ruled out an inquiry, saying that after viewing footage and seeing other classified information he was convinced the people killed in the raid were insurgents, not civilians.
Not long after taking office the coalition government said it would consider whether an inquiry should be held, tasking Attorney General David Parker with making that decision.
Mr Parker said in deciding whether to initiate an inquiry, he considered material including certain video footage of the operation.
"The footage I have reviewed does not seem to me to corroborate some key aspects of the book Hit & Run, the footage suggests that there was a group of armed individuals in the village.
"However, the material I have seen does not conclusively answer some of the questions raised by the authors.
"In light of that, and bearing in mind the need for the public to have confidence in the NZDF, I have decided in the public interest that an inquiry is warranted."
The inquiry will be undertaken by the former Supreme Court judge Sir Terence Arnold and Sir Geoffrey Palmer.
Mr Parker said the inquiry would seek to establish the facts in connection with the allegations, examine the treatment by the Defence Force of reports of civilian casualties following the operation, and assess the conduct of the NZDF forces.
"The inquiry, in common with all inquiries under the Inquiries Act, has no power to determine the civil, criminal, or disciplinary liability of any person.
"However it may, if justified, make findings of fault and recommend further steps be taken to determine liability."
The inquiry is expected to take a year to complete.
Mr Hager said today's announcement was "very, very good news for New Zealand".
"It is vital that, as a country, we can face up to incidents where our military does terrible things.
"International law says that countries have a legal obligation to conduct an independent inquiry whenever there are credible allegations of civilian casualties. The New Zealand Defence Force and government refused to do this for seven years. At last another government is doing the right thing."