UPDATED 6.30pm New Zealander Mark Taylor has been on a US terrorism list, with the US State Department saying he has been encouraging terrorist attacks here and in Australia.

Taylor, from Hamilton, is among five people named by the department on Thursday (US time) who now have sanctions imposed on them because they are believed to have committed terrorist acts or may do so.

The sanctions mean Americans are generally prohibited from dealing with them. Any property under US jurisdiction is frozen.

"Mark John Taylor is a New Zealand national who has been fighting in Syria with ISIS since the fall of 2014," the department said.

"Taylor has used social media, including appearing in a 2015 ISIS propaganda video, to encourage terrorist attacks in Australia and New Zealand."

Taylor is also known as Mohammad Daniel, Muhammad Daniel, Abu Abdul Rahman and Mark John al-Rahman.

He has also been dubbed the "bumbling jihadi" after a bragging tweet inadvertently revealed his location in Syria in 2014.

Prime Minister Bill English said he is confident New Zealand has the tools to deal with any returning foreign fighters, and does not need to adopt US measures which allow for seizure of terrorists' assets. 

Speaking to reporters in Wellington today, English said the designation made little difference to how New Zealand authorities dealt with Taylor.

"The designation gives them [the United States] capacity to deal with issues around travel and financial transactions.

"As far as we're concerned, we've got the tools to deal with this person if they turn out to be a risk."

English did not go into detail. But reforms which came after the rise of the Islamic State three years ago give the Government greater powers to monitor suspected terrorists or suspend their passports.

Taylor has previously said he wanted to remain in Syria, and he has burned his New Zealand passport. However, he is still able to apply for emergency travel documents.

English would not say what would happen if Taylor returned to New Zealand.

"That will be a matter of what risk he poses at the time and what his behaviour is."

He added: "We believe we've got sufficient powers to deal with any issues that arise, at the border if he's here. If he's in Syria, that's a big risk I would have thought."

New Zealand's terror threat level remains at "low". It was raised from "very low" in 2014 in the wake of overseas attacks by foreign fighters associated with Isis.

There was no plan to raise the terror threat level, English said.

Taylor once mistakenly sent out his exact location in Syria by forgetting to turn off the tracking function on his phone.