The victim suffered bruising to his eye, and he and his female passenger were left shaken.
Assistant Commissioner Dave Cliff, head of road policing, defended the tourist driver's actions, and said yesterday's incident was a "nasty assault" committed for no reason at all.
The tourist had simply moved to the right of the road and then back to the left on the urban street. "It was a really innocuous incident in terms of driving that was not unsafe ... There was nothing in terms of dangerous driving."
Police were looking for the assailant, he said.
It was the third time in recent weeks that motorists have confiscated keys from tourists.
On Monday, Sheri Wright of Haast took the keys of a Chinese tourist driving badly at Franz Josef. She has since defended her actions, saying it was the responsible thing to do.
Last month, a NZ driver confiscated the keys of an Australian near Lindis Pass.
Yesterday, Mr Cliff discouraged people from taking matters into their own hands. "The first option is to try and get us - we don't want people doing this and getting into altercations."
Mr Cliff said police were not complacent about tourist-driver crashes. Education was available to visitors, and rental car firms were putting road safety messages on steering wheels.
The Greymouth incident comes after new figures this week showed the West Coast had the worst record in the country for serious road incidents involving foreign drivers in the past five years - 37 per cent between 2009 and 2013.
Grey District Mayor Tony Kokshoorn said there was a "definite issue" with tourists driving on the wrong side of the road, and he had seen three such incidents in the recent past.
However, he was concerned that "extremist behaviour" from Kiwi drivers was becoming a trend, adding the actions of the man involved in yesterday's incident were "disgraceful" and "inappropriate".
Mayor Kokshoorn said simple and concise driver education was the solution.
Eight people have died in tourist crashes in the past fortnight - and the number of incidents climbed again yesterday.
A Japanese tourist was critically injured near Christchurch. Witnesses said the visitor's rented Suzuki Swift had been turning right onto McLeans Island Rd when it and a truck-and-trailer unit collided shortly after midday.
The truck driver was uninjured.
The crash came shortly after the four Chinese people had a lucky escape when their rental car plunged down a bank and ended up submerged in the Whataroa River.
Police said the 4WD Honda went off a gravel road just before midday.
All the occupants managed to escape before the water covered the car. None were seriously injured.
Tourist drivers have also made numerous appearances in South Island courts this week.
The most recent hearing was for German man Daniel Muller, who pleaded guilty in the Christchurch District Court yesterday to a charge of careless use of a vehicle causing death.
Witnesses reported he drove through a stop sign on Monday, colliding with a car driven by 54-year-old Leeston Stephanie Ellis. She was cut from the car but later died at the scene.
Muller will reappear in court for sentencing on March 10.
Online tributes continued to pour in yesterday for Ruby Jay Marris, 5, who died in a crash on State Highway 1 near Moeraki last Saturday.
The Marris family, of Oamaru, were travelling north when their car and a vehicle driven by a 32-year-old Chinese man collided.
The tributes to Ruby described her as a "beautiful little angel" and a "fun-loving princess".
The Chinese tourist, whose name is suppressed, was charged with one count of dangerous driving causing death and four counts of dangerous driving causing injury.
He entered no plea to any of the charges and was remanded on bail.
