Appointing New Zealand First leader Winston Peters as the foreign minister outside Cabinet sends "a very bad signal" to the rest of the world, says an international relations expert.

Terence O'Brien, a former diplomat and senior fellow at Victoria University's Centre for Strategic Studies, said excluding the Foreign Affairs Minister from Cabinet would have a disastrous effect on New Zealand's international relations.

"This is not because of who he is, but it's a signal that New Zealand doesn't think foreign affairs has enough status to warrant a seat around the cabinet table."

In the current international climate, the business of New Zealand's external relations was "a full-time job, which should command the highest attention from Cabinet", he said.

"We are poised on the brink of a whole new relationship with China, not just a trade agreement but within a new regional forum they've set up."

Other key relations, with Japan, India, the European Union and North America, also needed careful husbandry.

"The whole gamut of New Zealand's interest at the moment warrants a foreign minister within Cabinet."

He said it was "awkward" that Mr Peters had gone on record on numerous occasions regarding immigration, which could create a negative impression among some of New Zealand's Asian neighbours.

But foreign ministers did not actually handle migration issues directly -- that was the job of the immigration minister.

It was "not unknown" for someone to be appointed minister who had previously commented on issues pertaining to that portfolio.

As minister, he would "not be free to make those sort of comments".

He refused to comment on speculation that the position of foreign minister would enable Labour to effectively gag Mr Peters, or at least keep him busy offshore.

Mr Peters said before the election that NZ First would not go into a formal coalition, and he was uninterested in "the baubles of office".

- NZPA