LATEST: Police are to investigate illegal spying on Kim Dotcom and his co-accused Bram van der Kolk.

It emerged Government Communications Security Bureau (GCSB) agents illegally snooped on Dotcom and van der Kolk in the run-up to the raid on his home.

They are both New Zealand residents which protects them from spying.

Independent QC Kristy McDonald will review the inquiry and advise whether charges should be laid.

It's likely the investigation will see Finance Minister Bill English interviewed, because of his role in signing an order to keep the involvement of the GCSB secret.

Green Party co-leader Russel Norman laid a complaint with police last week.

Police Commissioner Peter Marshall has asked Deputy Commissioner Mike Bush to appoint a senior police investigator to assess and investigate the complaint.

McDonald was a senior counsel with more than 30 years experience in criminal law, Marshall said.

"She is a highly regarded Queens Counsel who has been engaged in major prosecutions, so she will provide excellent oversight of the police work," Marshall said.

"We can't put a timeframe on how long this assessment and investigation will take but it will be done as a matter of some urgency," he said.

Norman called for English, Prime Minister John Key and senior police to be interviewed.

The investigation must be ''comprehensive and thorough,'' he said.

"We welcome the police decision to appoint a Queens Counsel to provide independent oversight and police also need to ensure that no one involved in the case has a say in the investigation,'' he said.

An investigation by inspector-general Paul Neazor, released last week, concluded GCSB had wrongly interpreted the law.

Key called it a ''brain fade'' and ordered a review. Cabinet secretary Rebecca Kitteridge was today seconded as the new associate director of the bureau.

Kitteridge was currently secretary to the Department of Prime Minister and Cabinet and would spend three months on the review.

Labour leader David Shearer said the ''brain fade'' went all the way to Key's ninth floor Beehive office. He had called for a ''wide ranging'' independent inquiry.

"The Prime Minister's in-house review is not about getting to the bottom of the obvious failures of oversight from the top.  It's a scapegoating exercise, designed to find a couple of junior staffers to take the blame,'' Shearer said.

''The Dotcom debacle has exposed dysfunction and denial from the top down. Just about every senior figure involved in this affair has developed a worrying case of memory loss.''

It was revealed that police first told GCSB that their activities might have been illegal at a February 16 debrief, but the bureau's legal department concluded it wasn't a problem.

Intelligence co-ordinator Roy Ferguson attended part of the meeting, but couldn't recall it being raised. Key was never informed - and only learned of the spying on September 17.

English signed a ministerial certificate - essentially a suppression order -  in August after the GCSB asked for their involvement to be kept from Dotcom's defence team.

"How could it be that New Zealand's spies got it so wrong for so long without John Key and his senior intelligence officials apparently even noticing?'' Shearer said.

- © Fairfax NZ News