Iraq urgently needs increased aid and assistance from New Zealand as it faces a humanitarian crisis, Labour's foreign affairs spokesman says.
However, Prime Minister John Key said it would be "extremely unlikely" New Zealand would follow Australia in sending troops to Iraq.
Australian Prime Minister Tony Abbott said last night that combat forces could return to Iraq on a limited mission to "prevent genocide", as people from the minority Yazidi sect remain trapped on Mt Sinjar without food or water.
They are some of the hundreds of thousands of people who had fled the advancing Islamic State forces, which had delivered them the ultimatum to convert to Islam or die.
Labour foreign affairs spokesman David Shearer said the humanitarian crisis in Iraq would get worse before it got better, and New Zealand should pledge aid to support the United Nations agencies and non-governmental organisations on the ground.
The United States had carried out airstrikes that supported Kurdish forces on the ground and protected Yasidi families who were exposed.
"While not a long-term solution, airstrikes are needed to protect those vulnerable and ensure there are safe areas in which people can take refuge," Shearer said.
"It is clear that the number of people on the move is large and growing. Most are en route to current safety in the Kurdish autonomous zone in the north of Iraq."
Shearer questioned who would meet the basic needs of the hundreds of thousands of people when they arrived.
"New Zealand must support the agencies currently present in the Kurdish autonomous zone to ensure preparations are in place," he said.
"We also support the announcement of new [Iraqi] Prime Minister Haider al-Abadi and encourage a more inclusive government, particularly towards Kurds and Iraqi Sunni Muslims than outgoing Nouri al-Maliki whose sectarian approach aggravated tensions within Iraq."
Key said the Ministry of Foreign Affairs was monitoring the situation and assessing what New Zealand could do to help.