New Zealand First leader Winston Peters has announced that the party will repay $157,000 of taxpayer funds it was found to have misspent at the last election.

Mr Peters made the announcement at the start of the party's annual convention in Taupo this morning.

He said the transfer of funds to Parliament's coffers would be made in November when party term deposits rolled over.

The announcement puts to rest more than a year of questions about New Zealand First's intentions after Auditor-General Kevin Brady found that NZ First had used the money from its Parliamentary budgets unlawfully.

Most other parties were also caught - including Labour, which had to repay more than $800,000 - but they have all since either repaid the money or said they will.

New Zealand First has till now refused to confirm that it would definitely repay its share.

The party had sought legal advice which Mr Peters said this morning raised questions about Mr Brady's findings. However, a source said that advice also said it would be difficult to challenge Mr Brady as he was an officer of Parliament.

Mr Peters told the convention the announcement had been left till this morning as it was proper for it to be made to the party first.

"You see it is you that we are accountable to and that is why we are making this statement today.

"You'll be aware from the outset we took the stance that we had done nothing wrong, and that the auditor general had in this instance used a flawed process.

We, like other political parties, were the collateral damage - and I note and emphasise that - in the Auditor-General's crusade against Labour."

He said the legal advice showed there was much about Mr Brady's report which was "arbitrary, selective ... or in some cases plain wrong."

There was nothing more his staff could have done to check the material paid for with the cash and they should not be blamed.

Mr Peters' announcement at the start of the two-day conference was clearly designed to clear the air and leave the way free for the party to concentrate on strategies to build towards next year's do-or-die election.

Key areas to be settled include a timetable for candidate selection, due to start on December 1 and close around January 20.

That is likely to leave Mr Peters under pressure to make another long awaited announcement - whether he will stand in the Tauranga seat he lost in 2005 or choose to stand elsewhere.

- © Fairfax NZ News