New Zealand will extend its deployment in Iraq for another 18 months and expand to a second military base, Prime Minister John Key has confirmed this afternoon.

The non-combat deployment in the battle against the Islamic State (Isis) had been set to finish early next year, but would now last until November 2018.

As well as a longer deployment, New Zealand would commit a small amount of troops to travel to Besmeya military base, 52km from the Taji Military Base where they are currently based.

Mr Key said New Zealand's efforts in the country had been welcomed by the Iraqi Government and the anti-Isis coalition.

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"To put it simply, our people are making a difference," he told reporters at his weekly press conference.

The gains made by Iraqi and international forces needed to be consolidated. Isis remained a threat not only to the Middle East but domestically, because of its ability to motivate Islamic radicals, Mr Key said.

"The threat to New Zealand and New Zealand's [interests] remains a real one."

Read more: Barry Soper: NZ's Beehive dancing to America's beat in Iraq

Defence Minister Gerry Brownlee said today: "At Besmeya our troops will ensure a smooth hand-over of the Iraqi soldiers they've been training at Taji to other coalition trainers, who will be teaching them to use heavy weapons."

New Zealand's 143 military trainers would remain "behind the wire" and there was no plan for soldiers to engage in combat missions.

A soldier at Camp Taji. Photo / Supplied
A soldier at Camp Taji. Photo / Supplied

Mr Brownlee said the Cabinet had also agreed to provide training to stabilisation forces, such as the Iraqi Federal Police, in addition to the Iraqi Army.

New Zealand trainers' work with Iraqi troops was having a "tangible effect" on the local forces' ability to take and hold ground from the Islamic State, Mr Brownlee said.

"So it makes sense to continue doing something that adds value to the likelihood of Iraqi peace and security in the future, and to amend our mission to meet the changing environment in Iraq."

Mr Key could not rule out a further extension to the deployment beyond November 2018, but said he did not want the New Zealand Defence Force to be in Iraq "forever".

He was "extremely reluctant" to change the mission to allow any troops to go beyond the wire.

"It's just not quite job done yet," Mr Key said.

Labour was informed of the decision this afternoon.

Defence Minister Gerry Brownlee said New Zealand "was not insulated from the sort of events we have seen in Orlando".

Mr Brownlee briefed Leader of the Opposition Andrew Little on the Government's plans this afternoon.

A spokesman for the Labour leader said Mr Little's opposition to the deployment had not changed, and he was against keeping troops in Iraq.