Asked to recall his favourite memory of the the former All Black, Mr Key said Lomu's performance at the Rugby World Cup in 1995 had "brought the cup alive".
"I can't help thinking how incredible he would have been if he hadn't been suffering from the health conditions he had. Because he was amazing even carrying that burden."
Mr Key said Lomu, who was of Tongan descent, had a great affection for New Zealand.
"He was someone that knew his heritage and history well, and Pacific culture, but absolutely loved the All Black jersey and loved the interaction he had with the New Zealand public."
The Prime Minister said Lomu was the sport's first global superstar, and he remained a "massive name" long after he retired.
"He is truly a legend of the game and I think New Zealanders will really feel Jonah's loss in an amazing way."
Mr Key also revealed that Lomu had been planning to set up rugby academies around the world, and he was unsure what would now happen to those plans.
He said Lomu's performance at the Rugby World Cup in 1995 "brought the cup alive".
"I can't help thinking how incredible he would have been if he hadn't been suffering from the health conditions he had. Because he was amazing even carrying that burden."
Mr Key said Lomu had a great affection for New Zealand.
"He was someone that knew his heritage and history well, and Pacific culture, but absolutely loved the All Black jersey and loved the interaction he had with the New Zealand public."
The Prime Minister said Lomu was the sport's first global superstar, and he remained a "massive name" long after he retired.
"He is truly a legend of the game and I think New Zealanders will really feel Jonah's loss in an amazing way."
Mr Key also revealed that Lomu had been planning to set up rugby academies around the world, and he was unsure what would now happen to those plans.
Jonah Lomu honoured in Parliament
Lomu was honoured in Parliament today, with Sports Minister Jonathan Coleman moving a notice to pay tribute to the late sporting superstar.
"He was a man who came from very humble beginnings in Mangere, South Auckland, and rose to become the first ever global rugby superstar," Dr Coleman said.
"He was a major inspiration to a whole generation of Polynesian men, because Jonah proved that you could come from anywhere in New Zealand and make it to the very top."
NZ First leader Winston Peters said, "as Muhammad Ali was to boxing, Jonah Lomu was to rugby".
Mr Peters remembered the "buzz that nobody will ever hear again so loud of Aussie admiration" in Sydney when Lomu made an early appearance and what would become a trademark run.
"He was simply the greatest player we have ever seen...it is a very sad day, a tragedy...our condolences go out to his family...to Tonga...to Wesley College...to the people of Mangere in South Auckland, but, above all, to all his friends and admirers around the world."
Trevor Mallard, speaking on behalf of Labour, said the party extended to Lomu's family its condolences.
"A combination of international television...and Adidas, frankly, meant that he went from being one of our stars to a world star."
Mr Mallard gave thanks to New Zealand radio personality Grant Kereama for donating his kidney to Lomu in 2004, and by doing so extending the former All Black's life and quality of life.
Green Party MP Kevin Hague said no player had so dominated rugby as Lomu did, and spoke of his immortal try at the 1995 Rugby World Cup, when he steam-rolled the English player Mike Catt.
"He was often the last player to leave the field, still signing autographs for kids until the kids were gone."
On the way in to the House, the vast majority of politicians were stopped to talk about only the one subject. They paid tribute to Lomu, not only for his sporting ability but as a role model in the way he conducted himself after his All Blacks career ended.
Acting Prime Minister Bill English said Lomu was a sporting role model for a generation of New Zealanders.
"But the great thing about Jonah Lomu was he got past being an active sportsman and a global figure and he conducted himself with real dignity. My most recent memory is just of a dignified man who understood his fame and knew how to give back. As a rugby player, of course, he was just magnificent."
Labour leader Andrew Little said today's news was extremely sad.
"He is the beginning of the age of professional rugby...he epitomised that All Black image of unstoppability."
Labour's pacific affairs spokesman Su'a William Sio said the Pacific had lost a friend and a hero.