He also made some early lobbying for his personal choice of a silver fern, defending it against criticism from war veterans.
When the decision to review the flag was announced in March, a two-stage referendum was proposed.
Mr Key confirmed yesterday the first referendum was likely to be held in late 2015, when New Zealanders would vote for the best alternative flag out of a handful of options.
The options would be selected by an independent steering committee, which would be in charge of considering submissions from the public.
A second referendum would be held in April 2016 in which New Zealanders would vote on adopting the best alternative flag or staying with the Union Jack and Southern Cross.
The debate is likely to be divisive. A Herald-DigiPoll survey showed 52.6 per cent of Kiwis opposed a change and 40 per cent wanted a new flag.
At the Returned Services Association conference in Wellington yesterday, national president Don McIver said "a significant majority" of members would fight to retain the status quo because it was "deeply meaningful" to them.
"We think our flag is a much-loved flag and it probably deserves more than to be called a relic," he said, responding to Mr Key's description of the national flag as a colonial relic.
The RSA did not want a change during World War I centenary commemorations, though the Prime Minister assured Mr McIver the present flag would be flown throughout the centenary programme.
Mr Key has made it clear he wants a change and yesterday reinforced the arguments for a new flag.
He reiterated that a change to a silver fern design would not be disrespectful to soldiers who fought and died under the Union Jack and Southern Cross, because the silver fern was carved into the gravestones of soldiers killed abroad.
His original preference was for a silver fern on a black background, but he was now leaning more towards a design by Wellingtonian Kyle Lockwood, which is blue and red. He said his change of preference was not related to concerns about evoking the black flag of extremist Muslim group Islamic State.
Monarchy New Zealand spokesman Sean Palmer said his membership was divided about a change.
"On one hand there is heritage and history in the current design, but by the same token changing the flag to a distinctly New Zealand design, when the Queen is seen with that flag, it will highlight her distinctive role here in New Zealand even more."
