The Prime Minister says any intelligence gathered by New Zealand in Iraq would not be used specifically to direct airstrikes, only to protect New Zealand military personnel on the ground.
John Key Photo: RNZ / Alexander Robertson
However, Mr Key said that could change as the operation progresses, and the public would not necessarily be notified.
Up to a 100 New Zealand personnel could be deployed - a mix of training troops, and other soldiers to protect them.
Mr Key said intelligence gathered by New Zealand, or others, would be used in a specific way.
"What would be occurring would be collection on the basis to support our activities there and only our activities there but that position can change and it's yet to be determined how we might provide that intelligence.
"But you would expect us to provide intelligence to make sure that our people are safe."
However, because New Zealand was part of the Five Eyes, intelligence provided to that network could end up being used to direct airstrikes.
"Well I can just never rule out that as part of a wider initiative of gathering information as we do in the Five Eyes, ultimately where that information goes.
"I think there's quite a clear delineation between broader intelligence which might be used as a specific thing and the specific tasking of gathering information to form part of a drone strike for example for instance, we're not undertaking that.
Andrew Little Photo: RNZ / Alexander Robertson
Labour's leader Andrew Little said there were two forms of intelligence gathering - signals intelligence that could be done from here or anywhere in the world, or by 'boots on the ground'.
"So the Prime Minister does need to be clear about what he means by that - I'd be surprised if as a result of Five Eyes we are not already gathering intelligence and providing that for the use of airstrikes or other military uses."
New Zealand soldiers will not have the protection of a status of forces agreement as the US has, but rather are likely to be operating under diplomatic passports.
Labour's Defence spokesperson Phil Goff said says that was a "mickey mouse" arrangement.
"The idea that you take diplomatic immunity and hold your passport up against the consequences of your action as a member of the military is really bizarre.
"It's not fair, and it's not sufficient protection for our people."