Key told 3 News the mass surveillance plan was in response to cyber attacks targeting New Zealand businesses in 2011.
A spokesman for the GCSB last night said the agency was aware of the PM's suggestions but could not comment.
The accusations were flying within hours of Greenwald's whistlestop New Zealand visit as he promised to dish the dirt on our spy agency five days out from the general election.
Flown in by the Internet Party, the prominent US journalist embarked on a non-stop interview circuit claiming the GCSB was spying on its citizens and on other countries.
Last year, Key put his job on the line saying he would resign if the GCSB had been spying because it would have been illegal.
Greenwald told the Herald on Sunday he would be releasing details on American e-news site The Intercept ahead of tomorrow's "Moment of Truth" town hall rally.
"If I were him I would come to seriously regret that pledge given the reality of what his Government has been doing," the American said.
Watch: GCSB not collecting data on New Zealanders
He would also reveal the New Zealand spy agency was electronically tapping governments considered far from hostile.
"There's several countries that I think New Zealanders would not view as natural targets for New Zealand to spy on."
Surveillance intelligence that implicated the GCSB included internal government communications and those between governments and third parties.
He said his information was based on spy activity as recent as May last year. "It would be better for New Zealanders to have as much information ahead of the election on which they could base choices."
He is due to fly out of the country on Wednesday. His appearance fees are to be donated to a local charity.
Labour leader David Cunliffe said if evidence emerged that Key had misled the public it was "extremely serious".
"I would be extremely upset if the pledges that have been made to New Zealand around our freedom from mass surveillance prove to be false.
"If the Prime Minster of the country has lied to New Zealand, I expect New Zealanders to react in the ballot box. The Prime Minister is our only real check and balance on the intelligence establishment. This goes to his right to hold office."
Watch: Key: GCSB passes on Drone intelligence
Labour wants a full review of intelligence services and to repeal the GCSB law changes made last year, and replace it with a law that is "more protective of New Zealanders' rights to privacy and freedom".
Internet Party founder Kim Dotcom, who funded Greenwald's visit, said he would release information showing Key knew his identity well before the FBI raid on his Coatsville compound - something Key has denied.
Next article: He's Dotcom's little henchman: PM attacks journalist's spy claims
This revelation was to have been given in evidence at his extradition hearing, said Dotcom.
- additional reporting Cherie Howie
