"What they prove is that America is many countries, and, sadly, that is a very retrograde aspect of America you are hearing out of that man."
Asked about the threat of extremists here, Mr Peters said he remained seriously concerned about the "carelessness" with which New Zealand had allowed people into the country.
"I think that our country is far less secure today than it was three or four years ago."
National Cabinet minister Paula Bennett said Trump's comments were both ridiculous and appalling - and took the opportunity to have a dig at Labour's analysis of Auckland housing data based on Chinese surnames.
"It is almost like defining houses on a surname instead of actually looking into the depth of who a person might be and what they really stand for."
Labour Party foreign affairs spokesman David Shearer said they were "moronic" and undermined the United States' reputation for religious freedom.
"I think it's likely to play into the hands of the very people he is worried about," Mr Shearer told the Herald.
"This is exactly what extremists would want to see. But more importantly, he's missed the plot in terms of the violence that claims most American lives. It doesn't come from Muslim extremism, it comes from people within their own society."
Mr Shearer said he was optimistic Trump would be overtaken by a more sensible and humane Republican candidate.
READ MORE:
• Nazi piece of work? US paper likens Trump to Hitler
• #TrumpIsDisqualifiedParty: Donald Trump trending worldwide
• Donald Trump: Ban Muslim travel to US
Maori Party co-leader Marama Fox said the comments showed Trump's ignorance, "but that's America for you, what are you going to do".
"If you look at the freedoms, to express your voice, to speak, the freedom of religion is also one of those freedoms. If he is going to go down that road, he is actually going against his own religion."
Ms Turei said Trump was "idiotic".
"He is no example to anyone, I am amazed that he is being reported in New Zealand. Really, why would anyone pay attention to such a man?
"I can't explain American politics, I'm sorry, but I certainly don't feel like it has any relevance to New Zealand."
Ms Turei said she was concerned when inflammatory statements were made in New Zealand, including those made yesterday by Prime Minister John Key on so-called "jihadi brides".
"I am astounded...that John Key would think that the only good use of a women going overseas is as a wife. And I do think that is another way of treating Muslim women in particular in a very derogatory way.
"I am concerned about that sort of language here, when it is by New Zealand politicians who know better."
SIS director Rebecca Kitteridge had told the intelligence and security committee that an increasing number of New Zealand women are heading to Iraq and Syria.
Asked afterwards by Mr Key if they were "jihadi brides" she said: "Presumably. It is difficult to see what they do when they go. We definitely have intelligence that they went".