UPDATED 11.46am The Prime Minister says there was little option but to extend our Iraq deployment.

LISTEN ABOVE: Labour leader Andrew Little talks to Rachel Smalley

The Government has announced an extension to the two-year deployment, keeping up to 143 personnel in Iraq for an extra 18 months. It will cost an extra $10 million, and take the total to $50 million.

MORE: NZ to extend its deployment in Iraq by 18 months 

John Key admits it's a change from the initial promise, but said there's still work to do.

He said the other options are to "do nothing", or do "something that in hindsight may be more dangerous".

Mr Key also won't rule out another extension, past the new November 2018 deadline.

"I don't think you can guarantee that, but I figure it's critically important that New Zealand plays its role in standing up to ISIL, and I think it's been playing a very effective role, but actually I don't want to see New Zealand forces there forever."

Gerry Brownlee: 18 more months to improve Iraq

But Labour leader Andrew Little said our resources are better used elsewhere.

"We can be a good global citizen by looking after the civilians who are displaced," he said.

"What we don't want to be is caught up in a conflict that goes way out of control."

Mr Little said we seem to have lost control of our part in the conflict.

"The fact that he's now completely indefinite about how long we might be there - we could be there for a long, long time. The real threat then is of civil war and who knows where that will go."

Green co-leader James Shaw said we shouldn't have our military in Iraq at all.

"This is mission creep, and it's extremely dangerous. He's broken a promise about how long we were going to be there in the first place, it could easily get extended again, both in terms of the length of time we're over there and also in terms of the scope of the mission.'

Mr Shaw said military deployment puts New Zealanders at risk, when our skills are elsewhere.

"Our good global citizenship role would be much better deployed as part of the humanitarian effort, rather than part of the military effort. We've got a lot more skill in humanitarian aid."

Meanwhile Australia is being said to have had a hand in our decision to stay longer in Iraq.

Defence Minister Gerry Brownlee told Mike Hosking there's been a discussion about what the right thing to do is for a period of time.

"The Australians have said if you are going to stick to your two years could you let us know at least 12 months out so that we can backfill."

Mr Brownlee said people would have also seen the letter the United States sent asking coalition parties to consider staying in Iraq longer.

But, he said, there wasn't a lot of pressure from the Americans following that.

Director of the National Centre for Peace and Conflict studies Professor Kevin Clements told Mike Hosking the decision wasn't just based on pressure from the Australians.

He said Brett McGurk, who's in charge of the United States anti-Islamic State coalition, has been heavily involved.

"He's the one that's been stitching this up by in large. He's been launching a very extensive propaganda, cyber campaign against ISIS."

Professor Clements said our training of Iraqi troops is futile and it's not the right decision to continue for another 18 months.

"When you have division at the political level, no matter what contribution New Zealand make of that in terms of our small contribution to training programmes, is neither is here nor there."

However Mr Brownlee hopes we won't need to extend our time in Iraq again as our troops will be able to help make a real difference in this next period.

"If they've managed to reclaim 45 per cent of territory inside the last 12 months, then you could think inside that next 18 months the situation in Iraq could change quite dramatically."

The Defence Minister said New Zealand is not insulated from incidents like the recent mass shooting in Orlando, in which the gunman pledged allegiance to ISIS.

But Labour MP Grant Robertson said while that's possibly true, it's important to be clear the attacker was a lone wolf.

"That guy had absolutely no connection to ISIS he was claiming them as his motivation but he had no connection to them so we've got to be a little bit careful that ISIS is active in our country."