Prime Minister John Key has confirmed the New Zealander killed in an anti-terror operation in Yemen was being watched by intelligence agencies.
The was killed in a US Predator drone strike on a convoy of al Qaeda militants in Yemen, though he was reportedly not the target of the strike.
The man, who had dual Australian and New Zealand citizenship, reportedly went by the name of "Muslim bin John" and fought under the name "Abu Suhaib al-Australi".
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Key said he had known for "quite some time" the man was in Yemen and had terrorist connections.
He was informed by New Zealand intelligence agencies late last year that it was highly likely the man had been killed, though it took time for DNA testing to confirm this.
He said he did not have details on the man's movements there, though he was involved with terrorist groups and had been to "some sort of terrorist training camp".
"So I think all that shows is the things that I've been saying for quite some time that we need our intelligence agencies to track some of our people, that there are New Zealanders who go and put themselves in harm's way, have all been factually proven to be correct."
Key last year revealed the Government's spying agencies were monitoring New Zealand militants in Yemen.
The man, who was born in New Zealand, had next of kin and family here and they were advised some time ago that he had been killed, he said.
The man had been buried in Yemen.
His name would not be released though Key confirmed it was not Mark Taylor, a New Zealand man alleged to have links with al-Qaeda.
Key said he supported the use of drones and said this was a legitimate strike.
"I think they are legitimate at certain times where countries are trying to contend with very dangerous situations and they're trying to deal with those terrorists without putting their own people in harm's way."
The incident is the first known killing of an Australian or New Zealand citizen in a US drone strike.
The controversial US drone programme has reportedly led to the deaths of about 2400 people since it began five years ago.
Federation of Islamic Associations of New Zealand president Anwar Ghani said he was not aware of the incident or who the man was.
Individuals were responsible for their own choices and had to take personal responsibility for the consequences, he said.
Australian citizen Christopher Harvard was also killed in the strike along with three other men, according to Australian media reports.
The Australian newspaper reported the men had been al Qaeda soldiers on the Arabian Peninsula. Both were reportedly aged in their 20s.
A Ministry of Foreign Affairs spokesperson refused to elaborate on the operation.
"We do not propose to discuss the details of the operation. We never discuss the details of such activity. There was no New Zealand involvement in, or prior awareness of, the operation."
Labour's foreign affairs spokesman, David Shearer, said anybody who went to fight in hot spots such as Yemen would know the risks that were involved and the possibility that they would be killed or injured.
"I think if you are going to be in that theatre and fighting on behalf of al Qaeda, even if you are not intentionally the target, there is going to be the risk of either a drone strike or some other strike that you are going to be caught up in," Shearer said.
He acknowledged drone strikes were a controversial method of warfare.
"I can see that it's been effective in some cases [but] the collateral damage of drones has also been problematic in exacerbating some of the tensions that already exist in those areas.
"It's very, very difficult to target one or two individuals without spreading that collateral risk."
Shearer had not heard about the incident before today and said he would have expected word to get out through unofficial channels such as family or friends of the person involved.
Green Party co-leader Dr Russel Norman said "extra-judicial assassinations" were never warranted.
"The Government of the United States going around and assassinating people, I think, fundamentally undermines our freedom."
The fact the US did not inform New Zealand or Australian authorities showed it felt it had "free reign to assassinate people that it doesn't like".
Norman also questioned whether New Zealand intelligence agencies were in any way complicit, such as by providing information which might have helped lead to the strike.
"If we're going to deal with terrorism we can't act like terrorists, we need to actually obey the rule of law, that's what makes us different to the approach of a terrorist."
The Australian Government said it had not received any advanced warning of the strike.
The government had since positively identified the men through DNA testing, which they had matched with samples from families, The Australian said.
The paper quoted an anonymous intelligence official who said the men were not the targets of the attack. The US Government had later informed Australian officials the men "may have been collateral damage".
The paper quoted Harvard's stepfather as saying that Harvard had been buried in Yemen last week.
The Ministry of Foreign Affairs spokesperson said New Zealand's travel advisory for Yemen warned New Zealanders against all travel there "as there is extreme risk to your security due to the volatile security situation, the very high threat from terrorism and the risk of kidnapping".