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Prime Minister Bill English revealed that decision at his regular post-Cabinet press conference this afternoon, saying there was no basis for an inquiry.
It came after formal advice from Chief of Defence Force, Lieutenant General Tim Keating.
"After considering Mr Keating's briefing...and viewing video footage of the operation I have included there is no basis for an inquiry."
Mr English said if new information changed this it would be reconsidered. He said the allegations had caused distress to NZDF staff and their families.
"I want to reassure those families that there is...a great deal of evidence that their family members acted consistently with the rules of engagement."
Mr English had already ruled out an inquiry into allegations of war crimes, but until now had left open the possibility of some form of inquiry or further investigation into other claims.
Hit & Run by journalists Jon Stephenson and Nicky Hager claims six civilians were killed and 15 were injured in the 2010 raids in Afghanistan's Baghlan province, and those facts have been covered up by the New Zealand Defence Force (NZDF).
The book said the raid was a revenge attack on insurgents who were believed to be responsible for the death of soldier Timothy O'Donnell, the first New Zealand combat death in Afghanistan.
Stephenson and Hager, Labour, the Green Party, New Zealand First and United Future have all called for an inquiry into the allegations in Hit & Run, as have lawyers acting for Afghan villagers.
Lt-gen Keating and the NZDF say the book contains major inaccuracies, including the location of the villages where the raids took place, named in the book as Naik and Khak Khuday Dad.
Nine insurgents were killed in the raids, and it was possible civilians died because of misfire from a US helicopter, Lt-gen Keating said last Monday, but this could not be established.
The NZDF has previously said investigations by the International Security Assistance Force (ISAF) after the raids determined allegations of civilian deaths were "unfounded".
Wayne Mapp, who as Defence Minister approved the "Operation Burnham" raids in 2010, outed himself as a source for the book on Friday and called for further investigation to find out if civilians died.
Mr English said the video he saw confirmed the "extensive steps" that forces took to ensure minimal opportunity for civilian casualties.
He would not say whether the video showed insurgents being shot. The video footage would not be released.
The Prime Minister said there was the possibility that civilians were killed, but there was no evidence that had actually happened.
"In viewing this I was impressed by the restraint, the care and the repeated assurance that the operation was conducted in such a way that would minimise casualties and the destruction of their property."
Mr English said the video was classified and he would not enter a process where "all actions" of NZDF were "available for public viewing".
"I trust the process," Mr English said, saying he had become more convinced after reviewing material that Lt-gen Keating's conclusion was right.
He had not spoken to anybody outside the Defence Force in reaching that conclusion.
Asked if NZDF had effectively investigated itself, Mr English said coalition forces and the Afghan Government had investigated the matter and the conclusions were confirmed by the investigation by Lt-gen Keating.
Mr English said Lt-gen Keating was independent, as he was not involved in the operation.
"The CDF...has serious legal obligations around investigating war crimes. If there was any evidence that the NZDF were covering up...that would be an extremely serious matter.
"There's not any real contest over the facts other than the book...which has got them wrong."