The Government has backtracked on previous statements that it knew nothing about a decision to replace its three-year-old BMWs with new ones.

The Government has been criticised for selling the relatively new fleet of 34 luxury limos and replacing it with brand new BMWs in tough economic times.

The new cars sell commercially for about $200,000 each but the Government gets a discount for bulk buying. The actual cost is not being stated, for commercial reasons.

Internal Affairs defended the sales, saying they made good financial sense.

Prime Minister John Key yesterday said the Government had not been kept in the loop about the decision, and that a six-year deal for the cars was signed by Labour with a three-year rollover clause.

"That decision to invoke that rollover and bring new cars in was made by the Department of Internal Affairs without reference either to their minister or to me," he said.

"I can't take responsibility for a contract that was entered into by the previous Labour Government, that wasn't brought to my attention or to my ministers' attention."

However, answering on behalf of Mr Key in Parliament today, Gerry Brownlee admitted ministers had been informed following the department's decision.

"Ministers were not briefed ahead of the decision to replace the fleet, which was made by the Department of Internal Affairs in November 2010. Following the department's decision, it is my understanding that the Minister of Internal Affairs wrote to the Minister of Finance on 17 December about the retention of surpluses on the sale of VIP fleet vehicles," he said.

Labour MP Trevor Mallard said Mr Brownlee had also confirmed Mr Key was responsible for the budget used to buy the cars.

"John Key has been trying to dodge responsibility for the purchase by using weasel words and blaming everyone else," Mr Mallard said.

"John Key is clearly not on top of his portfolio if he's unaware that millions of dollars are being spent right under his nose on new cars."

Internal Affairs said the value of the cars being sold was close to their purchase price and the contract offered the lowest annual operating costs of comparable cars due to fuel efficiency and tyre costs.

If they had decided to keep the cars and not buy new ones there would have been no penalty.