Updated 5:13pm: A visit to Australia and a chat with Tony Abbott has given Prime Minister John Key a clearer understanding of what action this country might take against Islamic State extremists.

Mr Key - at a World War I centenary event in Western Australia today - has spoken to Mr Abbott about Australia's Iraq mission.

But he has rejected speculation the government's planning to send 120 SAS troops to Iraq.

John Key says he will announce details in a speech to be delivered this Wednesday.

"And deficiencies that we may have identified in the New Zealand legislation settings that we have.

"It's also likely that we'll be in the position at least to give a sense of what sort of options are available to New Zealand when it comes to the situation with ISIS." 

The speech is expected to challenge perceptions that New Zealand is far removed from terrorist threats - as the Prime Minister takes a sterner approach on security issues.