He said it would be similar to the role New Zealand took in shoring up support for changes to the royal succession rules, so that a first-born daughter took precedence over a younger son in the line of succession.
He said it would not prevent Commonwealth countries which still had the Queen as head of state from becoming republics.
Mr Key said having the monarch as the head added to the kudos of the institution, and maintained its unique status as an international grouping. British media have reported that the Queen has asked Prime Minister David Cameron to raise it at the Commonwealth Heads of Government meeting in November which she will not attend because of security concerns about host country Sri Lanka.
Former Secretary-General of the Commonwealth Sir Don McKinnon said the issue was raised in his time from 2000 to 2008. Leaders had discussed other options such as sharing the post around each region.
"That's the point the leaders came back and said it's probably easier we just stick with the British monarch."
However, that did not mean the leaders would want it to be an inherited role and they were likely to want to still make the decision on it.
The Commonwealth
• Founded in April 1949. Now has 54 member nations.
• Queen is the Head of State of 16 Commonwealth countries, including New Zealand.
• One of the conditions of membership is that the countries recognise the Queen as the head of the Commonwealth.
• Countries are also expected to have a constitutional link to one of the existing Commonwealth nations. Mozambique and Rwanda (admitted in 2009) are exceptions to this.