The Prime Minister's principles are being called into question over his handling of the illegal spying on internet multi-millionaire Kim Dotcom.
The Green Party announced today that it has asked police to investigate the Government Communications Security Bureau's illegal snooping of the Megaupload founder.
Greens co-leader Russel Norman said he believed the spy organisation had breached the same law that Key had claimed cameraman Bradley Ambrose had broken in the "tea pot tape" saga, which cast a shadow over last year's election.
"In the Bradley Ambrose case the Prime Minister made a big song and dance about the fact it was a matter of principle, that his private communications in front of the entire media had been intercepted, well likewise it is a matter of principle in this case," Norman said.
A damning report into the Dotcom affair released yesterday by the Inspector-General of Intelligence and Security, Paul Neazor, found the GCSB failed to check the internet tycoon's immigration status thoroughly, and illegally intercepted his communications when he held a permanent resident visa.
Dotcom was arrested, along with three others, in January after police raided his rented mansion at the request of the FBI.
Before the raid, police had asked for information about Dotcom and his associates in case they posed a threat to officers. The GCSB gathered the intelligence even though it had no jurisdiction to do so.
Labour says there are too many unanswered questions in this case and leader David Shearer has sent a letter to the Prime Minister demanding a wider inquiry.
However, Key said today he sees no need for another inquiry and confirmed the head of the GCSB, Ian Fletcher, will keep his job.
"The issue doesn't sit with Ian Fletcher, it sits with other people in the agency who have failed to do their job properly," he said.
Support from former PM
Former Prime Minister Geoffrey Palmer is defending Key's handling of the case but the constitutional law expert said a legal challenge and compensation for Dotcom are highly likely.
Sir Geoffrey is a former law commissioner and told TV ONE's Q&A there should be no further inquiry into the illegal spying by the GCSB.
"These intelligence agencies have to be secret, if you're going to conduct a commission of inquiry in public they wont be secret," he said.
The former Labour Prime Minister said Key had acted appropriately by apologising and promising changes.
"Incompetence is more usually the explanation than anything insidious, but this was certainly incompetent by any standard.
"There will be quite large legal proceedings that follow from all of this, Mr Dotcom is the stuff out of which leading cases are made."
Sir Geoffrey also offered an insight into the actions of the GCSB at the top levels, saying the agency warned him his cellphone calls might be intercepted when he was conducting an inquiry into a fatal Israeli raid on a Turkish ship two years ago.
He suggested that sort of threat could be the reason why Deputy Prime Minister Bill English never called Key in the United States to say he had signed a certificate suppressing details about the GCSB's involvement in the Dotcom case.
"The difficulty is that if Mr English telephoned Mr Key overseas to talk to him about this, the communication could be intercepted by foreign people so he probably didn't want to do that."
More of Sir Geoffrey's full feature on Q&A this Sunday on TV ONE at 9am