The New Zealand Government has congratulated controversial Nobel Peace Prize winner Liu Xiaobo after earlier saying it was waiting on advice.

Asked yesterday about Mr Liu, Prime Minister John Key said he could not comment before receiving advice - despite United States President Barack Obama having offered his congratulations and called for Mr Liu to be released from prison.

Mr Liu, 54, was awarded the prize on Friday. He is serving 11 years in jail for campaigning for democratic transformation of China's one-party state.

He told his wife, Liu Xia, he dedicated the award to the people killed in the 1989 crackdown on pro-democracy protests in Tiananmen Square in central Beijing.

Mr Liu's prize was applauded in the United States and Europe.

However, the Chinese Government cancelled a meeting with a Norwegian minister yesterday because of the award.

China's Foreign Ministry called the prize an obscenity and blamed the Norwegian government, despite it having no say in who the Oslo-based Nobel committee awards it to.

State-controlled Chinese newspapers said the prize to Mr Liu showed a prejudiced West afraid of China's rising wealth and standing.

Foreign Affairs Minister Murray McCully was the first New Zealand Government representative offer his congratulations.

He said the Government had a good dialogue with its Chinese counterpart about human rights and democracy issues.

Officials had raised Mr Liu's case with the Chinese Government and the award meant he was likely to feature in future discussions, Mr McCully said.

"It's a significant and very credible international award and anyone that wins it should be congratulated.

"We do have different views from China on some human rights issues, we have a good and robust relationship with them so we feel able to raise those issues constructively."

China was increasingly more open and sensitive to such issues, Mr McCully said.

Mr Key also offered his congratulations.

He said he waited to congratulate Mr Liu until he'd seen the paper work.

"I've learnt it's always better to be cautious and careful in these instances."

Labour's spokeswoman for foreign affairs and trade, Maryan Street, and Green MP Keith Locke have offered Mr Liu their congratulations.

Ms Street called on China to release Mr Liu as a demonstration of its progress in areas of human rights.

"We applaud China for the huge leaps forward it has taken in recent years in advancing the social and economic conditions of its people, but we would also encourage China to make similar progress towards respect for human rights and democracy."

Mr Locke said New Zealand should advocate for Mr Liu's release.

"It is wrong for Mr Liu to be in prison simply for promoting the sort of democracy all New Zealanders take for granted."