A party leader in New Zealand's coalition government resigned his ministerial posts over allegations he leaked a report on the country's spy agency's surveillance activities.

The 30-year political career of Peter Dunne, leader of the United Future party, appears in tatters after he refused to show to an inquiry into the possible leak some of more than 85 email exchanges he had with a journalist.

The Kitteridge Report on the Government Communications Security Bureau was a six-month review by Secretary of the Cabinet Rebecca Kitteridge over legal compliance of GCSB surveillance activities on New Zealand citizens.

Kitteridge's investigation was the result of GCSB's activities concerning German Internet entrepreneur and convicted fraudster Kim Schmitz, also know as Kim Dotcom and wanted in the United States for alleged fraud and copyright infringement.

Dunne, 59, maintained his innocence in the leak of Kitteridge's report.

But he resigned as minister for revenue and associate minister for health, both non-Cabinet posts, The New Zealand Herald reported.

Dunne -- the only member of Parliament for the United Future party -- was, along with Act New Zealand party and Maori Party, supporting the minority government of the National Party which won the 2008 election.

Despite urging from Prime Minister John Key that he cooperate fully with requests by the inquiry to see his email exchanges, Dunne refused.

"Once we start saying private correspondence is public property we go down a very slippery slope," Dunne said.

He also challenged Dominion Post publisher Fairfax to confirm he didn't leak the Kitteridge Report to Post reporter Andrea Vance.

But Fairfax executive Paul Thompson said the newspaper doesn't comment on confidential sources, the Herald reported.

Dunne, who broke away from the Labor party to form the United Future party in 2002, is holding back dozens of emails requested by the inquiry headed by retired public servant David Henry.

The Kitteridge Report was finished March 22, but leaked April 7. Pre-publication copies went to 34 people and Dunne is one who failed to return his copy, the Herald reported.

TVNZ reported Henry's investigation found Vance and Dunne had exchanged 86 emails in March and April last year. The report said Dunne declined to let Henry read any of the emails but offered edited versions of 44.

"I can't rationally explain why things happened the way they did," he said. "I have acted extraordinarily unwisely, even stupidly, and I am now resigned to paying the price for that."

Key said he was "very shocked" by the Henry report and accepted Dunne's resignation.

Kitteridge's report recommends greater transparency in, and overview of, the activities of GCSB in light of the controversial arrest of Kim Schmitz early last year.

Schmitz, 38, has convictions in Germany but suspended prison sentences for computer fraud, data espionage, insider trading and embezzlement, the New Zealand current affairs magazine Investigate reported in 2011.

New Zealand's immigration department granted him residency in November 2010.

But two months later he was convicted in Hong Kong on several counts of failing to disclose his shareholding levels and fined $8,000 Hong Kong dollars, Australia's Sydney Morning Herald reported in October.

New Zealand police arrested Schmitz along with several other people at his home during what appeared a heavy-handed raid in January 2012 involving 76 officers and two helicopters.

Key called the inquiry into GCSB activities because the spy agency didn't have a warrant to intercept communications leading up to the raid on Schmitz's mansion.

A report by 3 News TV in March last year said the United States had formally requested the extradition of Schmitz, who was out on bail after his arrest. He faces charges of racketeering, copyright infringement and money laundering in relation to his website, Megaupload, and other sites under the Mega brand.