He said Mr Peters had made a lot of commitments to the people of Northland during the byelection campaign.
"He has told them he is going to change their lives, so what I am telling him is that if he is really genuine about that, that it won't happen through rhetoric, it will happen through action.
"If he wants to be part of that, then we are happy to work with him, but history tells you that that is not his strong suit."
Mr Peters' win in the Northland byelection means National now has to get support from United Future leader Peter Dunne or the Maori Party for ordinary bills, whereas before the byelection forced by Mike Sabin's resignation, it had required only Act's one vote.
It means Resource Management Act reforms, which were going to be passed by National and Act, would have to "go back to the drawing board", the PM said.
Mr Key had personally spoken to Mr Peters about supporting changes to laws relating to the Government Communications Security Bureau.
"But he has typically played the role of Opposition in a way that he sees any collaboration with the Government as a failure for being in Opposition."
Mr Key does not believe his support partners, Act, United Future or the Maori Party, want to renegotiate any of their confidence and supply agreements with National even though he needs more of them to pass legislation.
They already had the ministerial warrants and levels of engagement that they wanted.
He would remain committed to giving them political wins so they could demonstrate to their supporters what had happened as a consequence of supporting the Government. "A byelection doesn't ultimately change that a hell of a lot."
Asked if he would consider renegotiating the agreements - something Mr Dunne pondered on several weeks ago - Mr Key he did not think the partners wanted to do that.
Mr Dunne would not answer questions but in a statement said New Zealand would have "constructive and stable government" until 2017 as it had between 2011 and 2014 when the same situation applied.
"And then, as now, New Zealand First is still irrelevant."
Act leader David Seymour does not think the result gives him any more leverage.
"If you look at it in sheer numerical terms, then yes I guess National do need to work harder to get the additional votes, but if you look at it from a philosophical point of view, I'm to the right of National and now the political centre of gravity has necessarily moved away from me and to the left towards Peter Dunne and the Maori Party.
"They are the real winners and the RMA is just a perfect case in point."
Maori Party co-leader Marama Fox believes her party now has "a little more leverage" to make gains for tangata whenua.
Mr Peters has the option of resigning his list position and getting a 12th New Zealand First MP or not resigning and keeping the caucus at 11.
Either decision does not affect the fact that National still needs two support partners to pass laws, not one.
