The Government will be holding an inquiry into Operation Burnham, and related events.
Operation Burnham was in August 21-22, 2010 in Tirgiran Valley in Afghanistan by the New Zealand SAS, which was a part of the International Security Assistance Force.
Journalists Nicky Hager and Jon Stephenson claimed in their book Hit & Run that six civilians were killed and 15 injured in a raid on villages by the NZSAS.
Attorney-General David Parker has announced an inquiry into the allegations willbe led by Supreme Court judge Sir Terence Arnold and Sir Geoffrey Palmer.
"In deciding whether to initiate an inquiry I have considered material including certain video footage of the operation," Mr Parker said.
"The footage I have reviewed does not seem to me to corroborate some key aspects of the book Hit & Run. The footage suggests that there were was a group of armed individuals in the village," he said.
"However, the material I have seen does not conclusively answer some of the questions raised by the authors.
"In light of that, and bearing in mind the need for the public to have confidence in the NZDF, I have decided in the public interest that an inquiry is warranted."
Mr Parker said the aim of the inquiry was to "get to the bottom of the allegations that was made in Hit & Run as to if they are correct or not".
"We think it is in the public interest to clear this up."
The inquiry has been given an initial budget of $2 million, is expected to take about a year and will start in May or June.
The evidence shows the basis for the operation met all legal requirements- National's Defence spokesperson Mark Mitchell
The Defence Force last year emphatically said New Zealand troops did not raid the villages named in the book and that "Operation Burnham" - which they said took place about two kilometres away - resulted in the deaths of nine insurgents.
Opposition leader Simon Bridges today said the matter was already looked into by the previous government and an inquiry would be a waste of money.
National's Defence spokesperson Mark Mitchell says an inquiry into the allegations raised in the book Hit and Run "undermines our Defence Force, risks New Zealand's relationship with its defence allies and is ultimately an expensive waste of tax-payer money".
"I was alarmed to hear the Attorney General say that 'continuing controversy' around the Operation has played a role in his decision. This suggests he has been swayed by a vocal lobby, instead of the facts," Mr Mitchell said.
Two of the former National government's defence ministers and the former prime minister have already reviewed New Zealand Defence Force evidence of what led to, and occurred, during Operation Burnham, he said.
"The evidence shows the basis for the operation met all legal requirements and that it was conducted with the highest level of professionalism.
"Based on the evidence we saw in Government, and the responses to our questions, this Inquiry is unwarranted," Mr Mitchell said.