Those advocating for the inquiry into Operation Burnham to be open to the public say a closed-door inquiry serves only to protect the military's reputation.
The inquiry was in response to allegations that members of the Defence Force killed six Afghan civilians during a military operation in 2010, then covered it up.
The allegations were made in the book Hit and Run, by the journalists Nicky Hager and Jon Stephenson.
Sir Terence Arnold and Sir Geoffrey Palmer, who were running the inquiry, released details on how the process would work yesterday.
They said while they wanted the inquiry to be transparent, much of the evidence would not be made public for safety reasons, and all witnesses' evidence would be taken in closed hearings.
Nicky Hager, who co-wrote Hit and Run in which the claims were made, said the decision to run the process largely in secret was hugely disappointing.
"This is an inquiry that was called for by the public, granted by the current government because the public felt so strongly, and now it's been turned into a closed-shop, where the public will only get token briefings on peripheral, irrelevant issues," said Mr Hager.
"When you're doing an inquiry into an alleged cover-up, the last thing you need is to do it in a secretive and closed way," he said.
He added that the public would likely not have confidence in any of the inquiry's findings, if it was done in secret.
"What they're going to find is that they don't have public confidence in what they're doing. And what they need most is that the public trust and are confident in what you're doing."
Deborah Manning, a lawyer for some of the Afghan villagers at the centre of the claims, said her clients had been calling for this inquiry for a long time, and had the right to hear what had happened.
"They've been put on the sidelines in a process that should be centrally about them and their losses," she said.
"Instead, it seems to be a process that's more focused on the reputation and needs of the Defence Force, rather than the Right to Life obligations that New Zealand holds towards these victims of war."
She and Mr Hager agreed that the inquiry's claims that evidence had to kept secret was untrue, as similar inquiries overseas had been completed in public.
Ms Manning and Mr Hager were both now considering what options they had.
"Legal systems always allow next steps," Ms Manning said.
"I'll certainly be considering those with my colleagues over the break."