Mr Key has denied that, but Greenwald has held his ground.
Mr Key said he would have more respect for Greenwald if he was not in New Zealand at Dotcom's behest and had not timed it for five days before an election.
"People got really wound up about me calling him Dotcom's little henchman. I would have a modicum of respect for the guy if he had the guts to turn up here six months before the election, or six months after. If this loser is going to come to town and try and tell me, five days before an election, staying at the Dotcom mansion with all the Dotcom people and being paid by Dotcom, that he's doing anything other than Dotcom's bidding - please don't insult me with that."
This morning Greenwald tweeted that in just the four days he had been in New Zealand, Mr Key's claims about what the GCSB had done had changed daily.
Mr Key has said the GCSB was working on a business study for a form of "mass cyber protection" following cyber attacks on several large New Zealand companies. Mr Key had told them it was too broad a net. However, this morning he indicated it had gone ahead on a limited capacity.
"I said I think it's too broad .. so in the end I said let's set it at a much more narrow level."
He denied that was mass surveillance.
Greenwald: NZers data is with the NSA
Large amounts of data about New Zealanders' electronic communications have been collected and lodged with US spy agency the NSA, evidence from spying whistleblower Edward Snowden will show today, journalist Glen Greenwald says.
Greenwald says he will publish an article on website The Intercept this afternoon based on documents obtained by former NSA (National Security Agency) contractor Snowden.
Those documents will show that New Zealand's Government Communications Security Bureau (GCSB) contributed "large amounts of metadata on New Zealanders" to the X-Keyscore database of information about electronic communications, Greenwald told National Radio's Nine to Noon.
Greenwald's comments come as Prime Minister John Key said he would be "highly surprised" if there was evidence the NSA had undertaken mass surveillance on New Zealanders. He said the US had different collection laws to New Zealand, but there was an informal agreement between the Five Eyes countries that they would not spy on each other.
However Greenwald said his article this afternoon would offer evidence of mass spying on New Zealanders.
"The New Zealand agency the GCSB has access to the X-Keyscore system that contains massive amounts of metadata about New Zealanders, if that is not a system of mass surveillance aimed at New Zealanders to which the New Zealand Government has access to, then nothing is." Greenwald also challenged Mr Key's comments that a "business case" for large scale collection of New Zealanders' metadata was considered but rejected by his Government.
"I cannot emphasise to you enough that this claim that he is making that this was just a business case, that this was kind of just a proposal floating around like all sorts of proposals constantly float around the Government is absolutely categorically false.
"The way that I know that is that the NSA documents specifically say that this project is underway and phase one has been achieved." He said phase one of the project involved tapping into New Zealand's main submarine data link with the rest of the world.
"That is not something that you do lightly. That is something you do only if the programme is being implemented." While he did not have evidence that data was subsequently collected, "what I do have is evidence from NSA whistleblower Edward Snowden that large amounts of metadata on New Zealanders was contributed to X-Keyscore system and that he personally worked with that metadata".
PM: Spy claims could relate to trading partners
Prime Minister John Key says it is possible US journalist Glenn Greenwald will produce claims New Zealand was spying on some of its trading partners.
Speaking on the Newstalk ZB Leader's Breakfast this morning, Mr Key was asked about claims Mr Greenwald would produce evidence of spying on China at the "Moment of Truth" event tonight.
Mr Key said he preferred to wait to see what Mr Greenwald delivered before commenting.
However, he did not believe it would relate to China. He would not rule out evidence of spying on other trading partners but said he would refuse to comment on anything like that because it related to foreign intelligence.
Mr Key also said he would be "highly surprised" if there was evidence the NSA had undertaken mass surveillance on New Zealanders. He said the US had different collection laws to New Zealand, but there was an informal agreement between the Five Eyes countries that they would not spy on each other.
Mr Key has promised to declassify documents proving the GCSB had not engaged in mass surveillance if that was what Mr Greenwald claimed. He suspected the event would be "a sound and light show."
"Dotcom is trying to save Dotcom's butt, and it is a relatively large one, so he's brought in three little butts to try and save his butt."
He also said the GCSB had not used mass surveillance information collected by the NSA. "We don't use our partners to circumvent the law."
Mr Key said he was confident with his previous statement that the first he had heard of Mr Dotcom was the day before the raid on his mansion - and had originally thought he was Korean because of his name.
The Solicitor-General had told him about the raid on a Kim Dotcom.
"I said 'is he Korean?' He said 'no, he's German." I said 'who's got a name like that?"
Mr Key also denied unequivocally that he was ever put under pressure over Mr Dotcom's residency by the US.
He said when the Warner Bros executives visited New Zealand it was not related to Mr Dotcom.
"It wasn't to encourage us to let Kim Dotcom into New Zealand, it was to get a better deal for the Hobbit."
