Photo: RNZ / Samuel Rillstone
Prime Minister Christopher Luxon has designated the political wing of Hamas as a terrorist entity.
New Zealand designated the military wing of Hamas as a terrorist entity in 2010.
Foreign Minister Winston Peters said the government unequivocally condemned the "brutal" terrorist attacks by Hamas in October, and the move had been taken after he received official advice.
"What happened on 7 October reinforces we can no longer distinguish between the military and political wings of Hamas," Peters said.
"The organisation as a whole bears responsibility for these horrific terrorist attacks."
The designation means any assets of the terrorist entity in New Zealand are frozen. It also makes participation in or supporting Hamas' activities, or recruiting for it a criminal offence.
However, Peters made clear the designation would not affect the provision of humanitarian support to Palestinians, and would not stop New Zealand providing aid to benefit civilians in Gaza.
"Nor does it stop us providing consular support to New Zealand citizens or permanent residents in the conflict zone," he said. "We remain gravely concerned about the impact of this conflict on civilians and will continue to call for an end to the violence and an urgent resumption of the Middle East Peace Process.
"A lasting solution to the conflict will only be achieved by peaceful means."
The coalition government has also banned several extremist Israeli settlers from travelling to New Zealand.
Peters said those banned have committed violent attacks against Palestinians in the West Bank.
It was not clear how many settlers have been banned and who exactly they are.
There has been a significant increase in extremist violence perpetrated by Israeli settlers against Palestinian populations in recent months, Peters said.
He acknowledged the official advice provided to him had been commissioned by then-Prime Minister Chris Hipkins in October.
Just over a fortnight earlier, Peters had specifically urged Israel not to begin a ground offensive in Rafah, a city in southern Gaza.
A day later, Prime Minister Christopher Luxon issued a joint statement with his Australian and Canadian counterparts calling for the same thing.
It included a call for an immediate humanitarian ceasefire, the release of hostages, condemned Hamas for its terror attacks on Israel, and said Israel must protect Palestinian civilians.