Australia's new citizenship rules appear to breach the good faith in which an agreement was signed between the two countries last year, Labour leader Andrew Little says.
Little described the Australia immigration changes as "very disappointing" for the hundreds of thousands of expats living across the ditch, especially as they came in the lead-up to Anzac Day.
Australian Prime Minister Malcolm Turnbull announced on Thursday that anyone wanting citizenship must have been a permanent resident for four years - up from one year.
It has left some Kiwi expats fuming because it comes just two months before a new pathway to citizenship is made available for New Zealanders who arrived in the country after immigration rules were tightened in 2001.
Under a deal struck between Turnbull and former Prime Minister John Key last year, New Zealanders who earned more than A$53,000 for five consecutive years could apply for permanent residency and, a year later, citizenship.
They will now have to wait at least another three years, meaning some expats will have spent 10 years in Australia before they can become citizens.
Little said today that the citizenship pathway signed off last year was a "vital" agreement between the two countries.
"If that has now been effectively scuttled, or more obstacles put in the way, it would seem to be a breach of the good faith in which John Key at least entered that agreement with Malcolm Turnbull.
"If that's the case then that is certainly very disappointing."
Of the 300,000 New Zealanders who arrived in Australia since 2001, around 100,000 are believed to be eligible for the pathway to citizenship. But because it was not available until July, none of them have been able to apply for it yet.
Little said many New Zealanders were "working their butts off" in Australia yet "never seemed to be able to get the reward of citizenship".
In a rare move, Little travelled to Australia in November 2015 to lobby for New Zealand expats' rights in front of a Parliamentary committee. He said today the issue should be raised "constantly" by the New Zealand Government in talks with its Australian counterparts.
Prime Minister Bill English said on Friday that the New Zealand Government had not had any communication with Australia about the citizenship changes, which also required applicants to pass English language and Australian values tests.
English said he wanted to fully understand the proposals before he raised any concerns with the Australians.
"It's just another issue in the ongoing discussion about the nature of the special relationship between Australia and New Zealand," he said.
But he conceded that the barriers to citizenship were growing.
"I think in the long run it's going to be tighter and more difficult to become an Australian citizen."
The Ministry of Foreign Affairs and Trade says it is seeking clarity on how the proposed changes will affect the special pathway to residency.