Vote for Change spokesman Jordan Williams, who is heading the campaign to dump MMP, said he was pleased to see Mr Key speak out against the system, and hoped other MPs would follow his lead.
"We're ecstatic that finally there is someone very senior talking about one of the middle options,'' Mr Williams said.
"We have been disappointed that the Prime Minister hasn't led an intelligent debate on this like David Cameron did in the United Kingdom.''
Mr Williams said politicians were focused on the election rather than the referendum.
Keep MMP spokeswoman Sandra Grey said Supplementary Member would deliver First Past the Post-style election results.
"Under MMP you are always sure that your party vote will count even if you don't support the winning candidate in your electorate. Under Supplementary Member you can lose out in a choice of electorate MP and have a devalued party vote to boot,'' she said.
Under Supplementary Member, there are 90 electorate and 30 supplementary seats. The share of supplementary seats a party receives is based on the percentage of the party vote it wins no matter how many electorate seats it has.
One of the major parties would usually have enough seats to govern alone under the system.