Mr Little said he expected the security situation in the Middle East to change significantly by the general election, by which time Islamic State might be pushed back further or defeated.
But if the conflict remained unchanged in Iraq and Syria, Mr Little confirmed he would withdraw New Zealand's deployment of 143 trainers from Taji Military Base, near Baghdad.
‘‘If it's the same as it is now, I cannot see a case for continuing,'' he said last night.
The Labour leader, who has expressed concerns about the Iraqi army's capability, said he would support New Zealand staying in Iraq in a peacekeeping capacity in the event IS was defeated.
‘‘If that happens, then there will almost certainly be the need for a peacekeeping operation under a United Nations mandate, which is something we are experienced at and good at.''
Mr Little made the comments after the Government confirmed the New Zealand Defence Force's two-year deployment to Iraq would be extended by another 18 months to November 2018, a major turnaround given its earlier commitments to end the mission in May 2017.
Prime Minister John Key defended the Government's decision to stay in the Middle East beyond the two-year deadline.
‘‘That was my expectation when we went in there and I had no particular reason to change that view. Over time, I've been persuaded with the arguments.''
The success of New Zealand's Iraq mission, and the impact IS was having worldwide meant ‘‘we need to ask ourselves if it is really acceptable for New Zealand to not play a role'', he said.
Defence Minister Gerry Brownlee said IS remained a threat not only in Iraq but domestically because of its ability to motive radical Islamists.
‘‘We're not insulated from the sort of thing that we saw in Orlando,'' he said, referring to the shooting in the US last week.
Green Party co-leader James Shaw said the Government's change of position opened the door to an indefinite, more dangerous deployment.
‘‘This is mission creep,'' he said. ‘‘The great risk here is given that [Mr Key]'s broken his promise to bring them back now, is that he can then extend it again in time as well as the scope of the mission.''
In addition to a longer deployment, New Zealand would also begin training forces tasked with keeping peace in cities recaptured from IS control, and would assist in transporting some Iraqi forces to another military base 50km from Taji.
New Zealand's extended deployment comes after the United States Secretary of Defence Ash Carter asked for greater commitments by international forces to defeat IS.
Mr Key stopped short of saying New Zealand was responding directly to this request. But he said New Zealand's new mission ‘‘fits within one of the many requests'' the US Government had made.
