The deaths bring to seven the number of New Zealand soldiers killed in Afghanistan since deployment to the war-torn country.

"It's a day of great tragedy," Key told a media conference.

"For New Zealand, a small country, losing seven of our men is an enormous price to pay. It reinforces the danger faced daily by our forces as they work tirelessly to restore stability to the province."

The soldiers were killed in an attack on Saturday when they went to the aid of local security forces who encountered suspected insurgents near a village in the central province of Bamiyan.

Two local security personnel were also killed in the attack while six New Zealand soldiers, 10 local security personnel and a civilian were injured.

The New Zealand Defence Force said the soldiers were members of the NZ Provincial Reconstruction Team (PRT) which has been based in Bamiyan for the past nine years.

"We are deeply saddened by this loss and, on behalf of the entire New Zealand Defence Force, I extend my deepest sympathies to the family, colleagues and friends of the personnel involved," defence chief Lieutenant General Rhys Jones said.

The brief gunfight erupted around 0700 GMT Saturday when a branch of the Afghan police came under fire while attempting to arrest an insurgent.

The New Zealand troops were called in to help stabilise the situation and were attacked by a separate group of insurgents, Jones said.

"Some anti-tank fire was put onto our armoured vehicles, as well as small arms fire rifles, machine guns on to our troops.

"We suffered two dead and the remaining six wounded in about a two-to-three-minute time frame."

Key confirmed the attack would not affect the scheduled withdrawal of New Zealand troops from Afghanistan next year.

The government announced in May the 145 troops in Bamiyan would be withdrawn in late 2013, a year ahead of schedule, after paving the way for an early handover to local authorities.

Foreign Minister Murray McCully said the early departure "reflects the outstanding work that New Zealand PRT personnel have done to prepare the province for transition to local control".

He said New Zealand would maintain a development role in Bamiyan province, where the PRT has been deployed since 2003, providing support for army officer training in Afghanistan.

A New Zealand deployment of about 40 elite Special Air Services troops based in Kabul ended its mission in March this year.