The announcement to the Parliament said, the government's controversial proposal to deploy "a military training mission" to Iraq is part of New Zealand's overall contribution to the international anti-IS coalition.
Key said that New Zealand's military personnel would fulfil a non-combat "behind-the-wire" mission to train Iraqi security forces, so they are better prepared to fight the IS.
"In return we expect to see genuine effort in Iraq to move towards a law-abiding democratic country that treats all of its citizens with respect," he said.
New Zealand military personnel would be deployed at the Taji Military Complex, north of Baghdad.
The New Zealand government would retain ultimate decision-making authority over the two-year mission, which would be reviewed by the cabinet after nine months.
Defence Minister Gerry Brownlee said the training would cover a broad range of individual and organizational military skills, including basic weapons skills, individual and unit military skills to prepare for combat operations, as well as other skills such as medical support and logistics.
Staff officers would begin taking up their posts in the region in March to help with preparations for the main deployment in May.