"[That has the same] chance as me holidaying on the lunar space station, I would have thought - just no chance," Mr Key said.
Asked if Mr Peters could be offered a place in Cabinet, Mr Key said that such situations would be taken on a case-by-case basis.
In the latest 3 News Reid Research poll, NZ First would have the balance of power, and on The Nation on the weekend Mr Peters would not rule out seeking a power-sharing role as Prime Minister.
He refused to answer a direct question, saying such questions were immaterial unless the party got the kind of support it needed in 2017.
However, he pointed out there was precedent of the leader of the second biggest party in a coalition becoming Prime Minister - George Forbes in 1932.
Mr Peters is currently in England with the Parliamentary rugby team, which is competing in their own world cup event.
NZ First MP Tracey Martin said the prospect of him asking for any position, including the top job, had never been discussed within the party.
"I think he is perfectly capable of being a Prime Minister. And I think that if the job came up and he was the guy to fill it, then I think he would do a fantastic job," Ms Martin said.
"But the reality is, those are conversations to have after an election, not now. We just don't discuss it."
Labour leader Andrew Little has also said any place for Mr Peters in a future Labour-led Government would depend on his support levels, but would not include the position of Prime Minister.
Ms Martin said she disagreed with Mr Little making that call now.
"He doesn't know who he has got to deal with [after the 2017 election]. It is a silly thing to do, in my view, it is silly to rule things in and out before the vote has taken place. You don't know what your position is."
NZ First deputy leader Ron Mark said opponents of the party were keen to play up the suggestion that Mr Peters could want to be Prime Minister.
"It is just mischief making. NZ First will do what we have to do, we will fight the good cause, we will fight for our party's philosophies and principles all the way through.
"We will negotiate in the best interests of New Zealand, and that's all I will say on that."
Under the Reid Research poll results, National (47 per cent) would need NZ First (8 per cent) to reclaim the government benches.
- Nicholas Jones of the New Zealand Herald
