A senior member of Saddam Hussein's deposed Government, discovered living in New Zealand, declared his connections on immigration forms, but a mistake meant the information was overlooked.
The man has been allowed to stay in New Zealand for close to a year as a result of the security lapse, which is being described as an international embarrassment.
Last night it emerged the man's background was overlooked a second time when he was allowed to remain for a further three months.
New Zealand First leader Winston Peters says he will name the man in Parliament today.
He described the man as one of the jailed Iraqi dictator's Government ministers.
Immigration Minister Paul Swain yesterday revoked the man's visitor's permit and said he must leave as soon as possible. He admitted the man had arrived on an Iraqi passport in the middle of last year and applied for permanent residency soon after.
The man also had his visitor's permit extended during his stay, meaning officials had two opportunities to examine his connections.
The man declared on his application form that he had been a diplomat for Saddam's Government, but this was overlooked by the Immigration Service.
Mr Swain would not name the man for privacy reasons but it is known he arrived in New Zealand with his wife and has family already living here. He is thought to be living in Auckland.
Mr Swain was adamant the man was not a security risk, saying if he was he would have been issued with a security risk certificate when he arrived in the country.
Mr Peters raised the alarm last week when he said he had information to prove a former minister in Saddam's Government in the 1980s and 1990s was hiding in New Zealand and was seeking refugee status.
At the time, Mr Swain said neither he nor the Immigration Service had any knowledge that such a man was in the country.
But yesterday he was forced to make an embarrassing back-track and announce that further investigations had uncovered the Iraqi.
It is understood high-level talks were held at the weekend about the damage the news would do, with concern being expressed that New Zealand would be perceived to be a haven for such people.
Mr Swain said the man had declared on his immigration forms that he had been a diplomat in Saddam's regime and had served as diplomat in a number of countries.
This information should have raised alarm bells when it was processed by the Immigration Service.
Mr Peters last night stood by his assertion that the man had been a Government minister, saying he was part of the Administration that condoned the genocide of the Kurds.
"He was a minister with connections, and serious ones."
Mr Peters said the Ahmed Zaoui case had given a clear signal that New Zealand was a soft touch.
Terence O'Brien, a New Zealand diplomat for more than 30 years, said there had to be evidence of the man's involvement with the "nastier side of Saddam's regime".
"If so, then that represents a breach in New Zealand's vigilance. But [Immigration Minister Paul] Swain said he's not on any security risk list.
"Unless Winston Peters has got very good evidence, he ought to lay off the diplomats."
- additional reporting: Derek Cheng