But the National's deputy leader, Paula Bennett, has stopped short of calling for Jacinda Ardern to strip Peters of his portfolio responsibilities.
Peters initially admitted to having photos – which were posted to Whale Oil-linked blog BFD – taken, telling Magic Talk: "We took the photos."
They showed RNZ's Guyon Espiner and Stuff's Matt Shand meeting with former NZ First president Lester Gray.
Both reporters have been investigating the mysterious NZ First Foundation.
But in a tweet last night, Peters did an about-turn and distanced himself and the party from the photos.
"NZ First has no interest in following Mr Espiner or any other journalists," he said.
The party had not hired a private investigator and it was a supporter, Peters said, who took the photos.
But speaking to RNZ this morning, Bennett said Peters was "pretty categorical" in his first admission that "we took the photos".
She said the situation was "pretty chilling".
She said Ardern said just the other day that she trusted Winston Peters – "well, we need to hear that again".
"I think if there is more to this, it's really leading to her having to [explore] some pretty serious consequences.
"She is the Prime Minister, this is her Deputy Prime Minister, she has to step in and tell us what kind of politics she will accept."
Bennett wouldn't go as far as saying Peters should be stripped of his portfolios.
"She tells us constantly what type of Government she wants to run and it's open and it's transparent and it's kind and it doesn't get involved in this sort of politics.
She called on NZ First and Peters to front up over the issue.
"A half statement that contradicts itself, quite frankly, is not good enough."
She said journalists shouldn't have to feel like they effectively have a political party following them and taking photos and then releasing them to a website linked to Whale Oil.
