"This means the GCSB will be able to provide support under the right conditions and oversight, including in relation to New Zealanders," said Mr Key.
However the proposed changes generated concerns last month that the GCSB would be able to intercept New Zealander's communications without a warrant when it is conducting its cyber security and information assurance functions.
However, Mr Key said when conducting that work, "the GCSB will require an authorisation from the Responsible Minister and the Commissioner of Security Warrants when its cyber security and information assurance functions are being performed in relation to the communications of New Zealanders".
See the final draft of legislation to clarify the GCSB's functions here
Mr Key said Cabinet Secretary Rebecca Kitteridge's recently completed review of the GCSB showed there were difficulties in the legal interpretation of the GCSB Act and that the "is not, and probably never was, fit for purpose".
"It is essential that an agency which is exercising intrusive powers has a clear legal framework to operate within.
"It's also essential the oversight regime governing such an agency is strong enough to mean the public can have confidence the agency is acting within the law."
Mr Key underlined the importance of the bureau's cyber security work by revealing the National Cyber Security Center had dealt with 138 incidents so far this year compared with 136 for all of last year.
He said the Government had sufficient votes to get the bill passed its first reading. While the Maori Party has said it is likely to oppose the legislation, NZ First says it will support to the committee stage.
Mr Key said he had written to NZ First Leader Winston Peters today asking for a meeting to discuss the bill and also said he had not ruled out Mr Peters' suggestion of a three person panel to issue and monitor any warrants the bureau operates under.
The bill also strengthens the oversight regime for New Zealand's intelligence agencies by modernising legislation governing the Inspector-General of Intelligence and Security to make the office more proactive. The Government also intends to increasing the resourcing of the Inspector- General's office.
The legislation is in the form of an omnibus Bill - the Government Communications Security Bureau and Related Legislation Amendment Bill - which encompasses amendments to the Government Communications Security Bureau Act 2003, the Inspector-General of Intelligence and Security Act 1996 and the Intelligence and Security Committee Act 1996.
The Government intends to introduce and debate the bill later this week, subject to the House schedule and following its first reading the bill will go to the Intelligence and Security Committee for submissions.