Prime Minister Chris Hipkins said New Zealand "condemns unequivocally" Hamas' terror attacks after the Palestinian group rampaged through Israeli towns.
At least 200 Israelis have been reported killed and 1100 wounded in gunbattles raging in more than 20 locations inside Israel. In Gaza, health officials reported more than 230 people killed and 1600 wounded.
In a standup on Sunday Hipkins expressed "grave concern" at the escalation of violence in Israel and Gaza.
"New Zealand condemns unequivocally the terror attacks led by Hamas on Israel. We are appalled by the targeting of civilians, and the taking of hostages which violate fundamental international humanitarian law principles," he said.
"New Zealand has designated the military wing of Hamas as a terrorist organisation, and we recognise Israel's right to defend itself.
"We are very concerned that the situation will escalate in the coming days and New Zealand again calls for restraint, the protection of non-combatants, and the upholding of international humanitarian law by all parties."
New Zealanders in Israel are advised to remain security conscious; monitor local media and stay informed of developments; register on SafeTravel and, if you require consular assistance, contact the New Zealand 24/7 Consular Emergency Line on +64 99 20 20 20.
Earlier, Minister of Foreign Affairs Nanaia Mahuta called for an immediate "cessation of violence".
"Aotearoa New Zealand is deeply concerned at the outbreak of conflict between Israel and Gaza," Mahuta said on X.
"We call for the immediate cessation of violence. The protection of all civilians, and upholding of international humanitarian law is essential."
But her failure to condemn Hamas for its terror attacks has led to criticism, with ACT leader David Seymour saying New Zealand "stands alone in the worst possible way".
Questioned about whether Mahuta was out of step with him, Hipkins said it was a matter of timing - and he wasn't involved in the discussions this morning.
“From time to time a response will evolve as further information comes to light and we get more information and I think what the world should be reassured by is that New Zealand absolutely condemns these attacks,” he said.
Professor of international law at the University of Waikato Alexander Gillespie said war crimes are being committed in the conflict.
He said the scale of the attack is hard to measure currently with so much missing information.
"Given a national unity government has been formed and a State of Emergency in Israel, - these are consistent with times of war," Gillespie said.
"War crimes are already being committed. Taking civilians hostage and indiscriminate attacks against civilian areas (as in, the rocket attacks) are clear crimes.
"Israel is already responding with force, which if previous conflicts are anything to go by, will probably be disproportionate (also a war crime)."
Gillespie said it looks like the goal of Hamas is to get hostages, which is illegal in international law and a "clear mark of terrorism".
"These can be living soldiers and civilians, as well as the bodies of the dead. Whether Israel will negotiate or not is unknown, but their practice is not to – as to negotiate makes you beholden to similar events in the future," he said.
"However, no leader wants to see their citizens abused and broadcast. In an ideal world, the International Committee of the Red Cross (ICRC) would have access to all prisoners and hostages; and exchanges would occur. This is unlikely in the short term."
Israel Prime Minister Benjamin Netanyahu has vowed the "enemy will pay a price the type of which it has never known".
"We are in a war and we will win it," Netanyahu said.
But Hamas leader Ismail Haniyeh said the assault that began in Gaza would spread to the West Bank and Jerusalem.
"This was the morning of defeat and humiliation upon our enemy, its soldiers and its settlers," he said in a speech.
"What happened reveals the greatness of our preparation. What happened today reveals the weakness of the enemy."
Reuters reports bodies of Israeli civilians lay strewn across a highway, surrounded by broken glass in Sderot, in southern Israel near Gaza. A woman and a man were sprawled out dead across the front seats of a car. A military vehicle drove past the bodies of another woman and a man in a pool of blood behind another car.
"I went out, I saw loads of bodies of terrorists, civilians, cars shot up. A sea of bodies, inside Sderot along the road, other places, loads of bodies," Shlomi from Sderot told Reuters.
