NZ PM says minority government possible

New Zealand Prime Minister John Key says he would rather form a minority government than hold another election.

A minority government was his "least preferred option", but he would be happy to do it, Mr Key told TV3's The Nation.

"What I don't want to do is look down the barrel of a camera, three weeks after the election and say... no one can form a government so you're having another election."

A minority government had been successful in Canada, Mr Key said.

"All a minority government means is that everything, case by case you have to find agreement with your partners.... If there's a confidence motion in government the small parties have to decide if they want to vote against you."

Mr Key said history had shown the parties National could work with had all formed governments.

"They may not get everything they want, but in the end my view of the political parties that we could work with is that they've shown that they can be responsible and they will form a government."

NZ First leader Winston Peters said there would be no instability in the future of New Zealand.

"There hasn't been under MMP since 1996, so why are we having people panicking and trying to scare the public."