Mr Key told reporters this afternoon he did not have to agree with every statement made by potential coalition partners.
"Over the last six years I've provided political stability for New Zealand. And if we're in the position to be the Government ? after the general election then I'll do my best to provide stability again as well.
"But MMP, as you know, demands that we ? work with other political parties. Now I don't agree with every statement they make and everything that they think, but that's unfortunately not a luxurious choice I have."
He added: "I think if Conservatives make it into Parliament we would be potentially able to work with them just in the same way we can with United Future and Act and the Maori Party and potentially New Zealand First."
Mr Craig also wants to scrap race-based funding, Maori seats in Parliament, and the Waitangi Tribunal.
Asked how Conservatives would fit into a coalition which could include the Maori Party, Mr Key said National had already worked together with Maori and Act, despite those parties' conflicting stances on Maori issues.
Mr Key also said Mr Craig's "contradictory" views on election deals would not affect any potential arrangements between National and the Conservatives.
Mr Craig has criticised National's "cup of tea" deal with Act, but has also said he expected National to step aside and let him win an electorate.
National plans to do deals with other parties could include accommodating United Future in Ohariu, Act in Epsom, and Conservatives in East Coast Bays. The East Coast Bays seat is currently held by National's Murray McCully.
Mr McCully would be absent for most of the election campaign because he would be lobbying for New Zealand's bid to be on the United Nations Security Council.
Mr Key said there were always "trade-offs" when electorates had a high-ranking minister as an electorate MP.