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New powers which allowed spies to use video surveillance on terror suspects for 48 hours in emergency cases have drawn the most criticism during debate on the urgent law changes, and some groups have recommended that the period should be reduced to 24 hours.
Asked this afternoon whether Government would consider making concessions in this area, Mr Key told reporters: "Potentially, yes ...I think that's the one area where potentially Government ... might be prepared to move."
He said further safeguards could be introduced for warrantless surveillance, or the 48-hour period could be reduced.
"We can mix and match that a bit," he said.
Mr Key said the Labour Party had made a number of proposals to Foreign Affairs select committee chairman Mark Mitchell, who was "seeing if we can accommodate, if not all of them, at least a decent number of them".
National's coalition partner the Act Party had also expressed discomfort with 48-hour warrantless surveillance.
National wanted cross-party support to send a signal that the issue was "above politics".
"In the end, this is about national security," Mr Key said. "It's a recognition that there are 30 to 40 people sitting on a list, there are people who are fighting with terrorist groups overseas.
"I think it's a sign of unity if we can to demonstrate that we want to tackle that issue to protect New Zealanders together."
If necessary, National would pass the bill with its support partners but it was Mr Key's preference to have Labour on-side.
"The most important thing is ... I would personally like to see the Labour Party support the legislation if they can."
The select committee has finished its discussions on the bill this afternoon after a shortened consultation process and committee members will take their recommendations to their caucuses tomorrow morning.
Mr Key said New Zealand was moving faster than Australia and Britain on anti-terror legislation because its proposed measures were narrower than other countries.
A full review of security settings, due to begin next year, would consider broader changes to intelligence-gathering and counter-terrorism.
In the interim, Government wanted to be able to cancel passports for a longer period, to give spies access to Customs data, and to introduce new powers for the Security Intelligence Service (SIS) to install video surveillance on private property.
Mr Key said there was "no question" New Zealanders were accessing "highly effective" online propaganda related to the terrorist group the Islamic State.
He said authorities were able to look at what sites New Zealanders were accessing, and how long they were spending on them.
"We know that they are very interested in the teachings they are getting from those sites."
There was an "exponential" increase in the number of New Zealanders accessing these websites in recent months, he said.
Government wanted the bill passed by the end of the year so the measures would be in force before New Zealand co-hosts the Cricket World Cup in February and March.
By Isaac Davison of the new Zealand Herald