In a two-year mission likely to start in May, New Zealand personnel will train Iraq security forces at the Taji Military Complex north of Baghdad, Key said. He said soldiers would provide protection for the training force.
Key said ISIS -- also known as the Islamic State of Iraq and the Levant (ISIL) -- posed a threat to stability in regions beyond the Middle East and New Zealand had "an obligation" to help support the rule of law internationally.
"New Zealand is a country that stands up for its values. We stand up for what is right," he told parliament.
"We do not shy away from taking our share of the burden when the international rules based system is threatened as it is today."
Key said attacks in Ottawa, Sydney and Paris had underscored the risk of complacency. "To those who argue that we should not take action because it raises the threat, I say this 'the risk associated with ISIL becoming stronger and more widespread far outweighs this.'"
In a statement
, Key referred to New Zealanders as "prolific travelers" who were not immune from the risk posed by ISIS. "ISIL's brutality has only worsened and its outrageous actions have united an international coalition of around 62 countries to fight and degrade the group," he said.
Opposition leaders were quick to condemn the decision, which they said should have been debated and voted on in parliament.
Labour leader Andrew Little said
his party was opposed to sending troops to Iraq and that it was unlikely they would remain behind the front line.
"The Prime Minister says they will be behind the wire but we know they will not be. They cannot stick there, they cannot stay there, that is not all they will do. They will not just be behind the wire; they will be exposed to the much wider conflict; it will not be just the soldiers we send to the Iraq, it will be Kiwis traveling around the world," Little said.
Green Party Leader Russel Norman said
Key was "dragging New Zealand into someone else's war without a mandate" and was making the country and its citizens unnecessary targets for ISIS.
New Zealand First leader Winston Peters s
aid Key had made a "giant turnaround" since ruling out a troop deployment. "Nothing has changed in Iraq, except 'his club' persuaded Mr Key to commit our troops," Peters said in a statement.
'Not taken lightly'
Key said the government had carefully considered New Zealand's contribution to the coalition.
"A training mission like this is not without danger and this is not a decision we have taken lightly," he said. "I have required assurances that our men and women will be as safe as they can practicably be in Taji.
The deployment came at the request of the Iraqi government and was likely to be a joint training mission with neighboring Australia, Key said. New Zealand's cabinet would review the deployment after nine months, he added.
The United States is leading the coalition to fight ISIS from the sky over Iraq and Syria. The militant group has declared an Islamic caliphate
in the area and demanded that all Muslims pledge allegiance to its leader -- Abu Bakr al-Baghdadi.
Richard Jackson from the National Centre for Peace and Conflict Studies at New Zealand's University of Otago
said New Zealand's commitment to the coalition would likely be dangerous for its citizens in the Middle East region.
"There is definitely a risk in joining the international effort and that risk is first of all that New Zealand personnel in the region will become a more identifiable target," he told CNN.
"The secondary risk is that New Zealand involvement in the international effort will radicalize people in New Zealand and or Australia. I think that's a very small risk because I don't think there are many potential extremists in New Zealand."
ISIS did not directly pose a threat to NZ domestically, Jackson said.
"The only influence they have is an indirect one. If they start showing pictures of civilians killed by Western bombing that might involve someone living in Auckland or Canberra or elsewhere who might decide off their own bat to commit an act of violence."
Jackson warned that the conflict would likely escalate and said that New Zealand had no clear exit strategy.
"Involvement just keeps going forward rather than backwards -- it will be very hard to disentangle," he said. "It seems to me like a bit of a knee-jerk reaction to the admittedly horrific propaganda videos produced by ISIS. The other problem is that ISIS has a plan and that plan is to suck in Western troops so that they can fight them on the ground. It suits their agenda."
Robert Ayson, Professor of Strategic Studies at Victoria University in Wellington
said that had John Key's government opted to allow parliament to vote on the deployment it likely would have failed to win majority support.
"It's been clear for some time that the government was intending to make a military contribution," he said."It's become an issue of considerable division between the government on the one hand and the opposition on the other."
New Zealand's successful pitch to join the United Nations Security Council involved presenting itself as a country that had an independent foreign policy, and may have been a factor in the delaying the commitment, Ayson said.
The delay had also provided opposition parties with plenty of opportunity to poke holes in the government's argument for joining the coalition, he said.
Comments Key made in January about involvement being "the price of the club,"
had fed into the opposition Labour Party's argument that being independent meant having "the ability to say no from time to time," Ayson said.
"It's quite possible that the government felt that it could get wider public support if this was just a training mission, but it hasn't been able to convince the opposition," Ayson said.
"For the opposition this is like 'let's not repeat 2003 [the Iraq invasion].' This is of course not like 2003, this is not an unrequested invasion," he said. "Given that there are 62 countries in the coalition it's not like Iraq in 2003. It's almost as if opposition parties in NZ are wanting to avoid the last war."
The United States said it welcomed New Zealand's contribution.
"As one of our partners in the coalition, New Zealand has already provided substantial humanitarian assistance to Iraq and Syria.
"We value the contributions and efforts of all partners in the mission as we work together on a multifaceted and long-term strategy to degrade and defeat ISIL," State Department spokeswoman Jen Psaki said in a statement.