New Zealand's national threat level in response to risk posed by foreign fighters and Isis has gone from "very low'' to ''low'' Prime Minister John Key said this afternoon but the Government will advance ''urgent'' law changes in response anyway.

Mr Key said Cabinet had today approved terms of reference for a review of settings in relation to ''foreign terrorist fighters''.

Such fighters taking part in or returning from conflict zones were a concern for many countries Mr Key said.

''Our intelligence agencies are aware of the risk and and focused on addressing it.''

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The number of New Zealanders fighting in such situations was ''modest'' but ''significant relative to New Zealand's size and they do represent a change in the New Zealand context''.

Mr Key said the risk was foreign fighters returned to New Zealand ''radicalised and with military training''.

Mr Key said New Zealand's national threat level had now been increased by officials from Very Low to Low, ''which means that where previously the threat of a terrorist attack was assessed as unlikely, it is now assessed as possible but not expected''.

Mr Key said the fact the matter was considered at the first Cabinet meeting of his new Government today ''underscored the importance we are placing on this issue''.

In light of the ''rapidly evolving environment'' Cabinet had told officials to review settings ''in relation to how we deal with the foreign fighter threat''.

Minister in charge of the SIS and GCSB Chris Finlayson said the review was expected to take about four weeks.

Any legislative changes would be interim measures which would be superseded by law changes flowing from a formal review of New Zealand's intelligence agencies next year.

Mr Key said the domestic threat level had gone up because of the ''changing international environment''.

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Mr Key said the current level of domestic alert was as high as it had ever been but was the same as was temporarily put in place during the 2011 Rugby World Cup.

The review would consider whether the capacity and capabilities of the SIS and other government agencies were sufficient to undertake effective and efficient investigations of suspected and returning foreign terrorist fighters, and other violent extremists.

Mr Finlayson said it was correct to say that the rise of Islamic State in Iraq and Syria and their recruitment of foreign fighters had the potential to fan domestic threats in New Zealand.

Mr Key said he had written to the leaders of other parties to offer them a confidential briefing from officials on the issues the review would address.

Mr Key said there were foreign fighters who had returned from conflict zones to New Zealand but he wasn't prepared to say how many.


New Zealand's threat level table: