UPDATED 5.46pm: Rules on GCSB surveillance of New Zealanders are set to change if new recommendations on intelligence laws are adopted by the Government.

107 recommendations have been made in a 173 page report released today, completed by Sir Michael Cullen and Dame Patsy Reddy, that will extend the powers of our spy agencies, the GCSB and the SIS.

LISTEN ABOVE: Sir Michael Cullen speaks to Larry Williams

Among them, it recommends current restrictions imposed on the GCSB, on intercepting the private communications of New Zealanders for intelligence purposes, be removed.

The review said current restrictions are confusing, doesn't protect New Zealanders to the extent it suggests, and hinders the SIS and GCSB from protecting against security threats.

At the same time, the review recommends the agencies and their oversight bodies be covered by a single piece of legislation covering all of the SIS and GCSB's intelligence and security activities, designed to safeguard privacy.

Also recommended is increased transparency, as well as greater independence for the Inspector General of Intelligence and Security.

Spy agencies are also set to be formally integrated into the public sector, with Sir Cullen saying there's no reason for the SIS to stay outside the state sector.

"So we're saying that - maybe with some very small exceptions - they become normal public sector agencies with all that that implies in terms of codes of conduct, appointment of a Directors and staff, labour relations issues."

The Government is hoping to have the new spy laws before Parliament by July.

It is hoping to get a consensus with Labour on the review released today.

Prime Minister John Key had a look at the report and generally likes what he sees.

"This is a series of positive changes from what I can see potentially, but actually we don't have to do it, but it would potentially make New Zealanders safer. I think that's a positive aspiration to be working towards."

"Of course our responsibility as the Government is to do everything to keep New Zealanders safe.

"I think most New Zealanders will take the perspective that they'll say they want to be safe. Obviously there's some trade-off with privacy and human rights."

However, Labour Leader Andrew Little isn't completely happy with the proposed reforms.

Mr Little said an area of concern is giving intelligence agencies automatic right of access to specific Government databases.

"I think wholesale access to databases, that will carry private information about perfectly innocent civilians, is a step too far, so I'm very keen to have further discussions with the Government about that and see where we can get on that."

However, Little is showing some support for the recommendation that both the GCSB and SIS should be governed by one Act, as opposed to the two separate ACT's they currently fall under.

He said laws governing the SIS and GCSB need to be as clear and consistent as possible.

"So if we get new legislation that helps to clarify powers, and also enables citizens to know what their rights are in relation to them, then that's got to be a better thing."