"I don't tell my wife how to vote so I'm certainly not going to tell New Zealanders how to vote but what I do try is to put up a proposition of why National in Government has been a good Government.
"In the end I think how people vote is a very personal thing but what we are clearly saying is we're not unhappy if National voters decide to vote tactically."
Mr Key, who lives in the electorate, said he would not vote for Mr Banks himself. As leader of the National Party, he would vote for the National candidate, Paul Goldsmith, but he refused to say outright that he would prefer to see Mr Goldsmith lose.
A clearly pleased Mr Banks said the endorsement didn't mean he would cease his efforts to win votes in Epsom where recent polls showed he was trailing Mr Goldsmith.
"I've got to win the hearts and minds of the electors of Epsom right up until polling day."
He also denied Act would have been history without Mr Key's nod. "I think I could have got across the line."
Mr Key said his tacit endorsement of Act was not driven by concern National would not achieve a majority in Parliament, a prospect that appeared more likely after National's support fell below 50 per cent in a Herald-DigiPoll survey this week.
"We're doing it because I want National to stay a centrist balanced moderate government and I think it actually helps us in terms of the stability of the country having parties to the left and the right of us."
He indicated that should they make it to Parliament, neither Mr Banks nor Dr Brash was likely to get a cabinet position. His preference was for a similar arrangement to that since 2008 where Act MPs have held ministerial roles outside cabinet.
He said he would have no problem working with Dr Brash, his predecessor as National Party leader, whom he has previously described as an "extremist".
"Don is flexible, [Act MP] Roger Douglas, with the greatest respect to Roger, wasn't."
Mr Key denied his meeting was an attempt to manipulate Epsom voters.
"Epsom voters have been saying for some time now that they want a signal at least of what their options are. We're giving them a clear signal today, in the end they'll make up their own mind."
Labour leader Phil Goff said he did not think the meeting would be enough to sway Epsom voters.
"It's a rort on the system, they know it and so do New Zealanders, that's why I don't think people in Epsom will go along with it."
Electoral signals
The traditional "cuppa" - or flat white - has become a default for New Zealand political leaders to send electoral signals. Some examples:
2005
* Labour leader Helen Clark and Green co-leader Jeanette Fitzsimons spent time campaigning together as a signal that the 2002 Corngate rift was behind them and they could work together. Result: Labour formed Government with NZ First and United Future, who rejected the Greens.
* National leader Don Brash spurned coffee with Act leader Rodney Hide, but did have one with United Future leader Peter Dunne. The venue changed at the last minute to ensure Mr Hide didn't gatecrash. Murray McCully stood on guard. Result: Hide won the Epsom seat from National anyway.
2008
* National leader John Key and Hide had coffee together in Remuera. Result: Hide retained Epsom.