Tonga's government is seeking legal advice after King Tupou VI endorsed the Police Commissioner's contract extension.
Kaniva News reported Steven Caldwell had been given another two years to oversee the local force after the extension was approved by the Privy Council last week.
His contract expired on 14 April.
However, the Minister of Police, Mateni Tapueluelu, said the government believed Mr Caldwell was no longer fit for the job.
Mr Tapueluelu said the government had not asked the New Zealand government to activate its funding aid scheme which pays for the majority of the Commissioner's salary.
He said he believed the Privy Council overstepped its bounds when it made the decision to prolong the contract.
Mr Tapueluelu said the government also believed the King had received bad advice before he approved Mr Caldwell's extension.
The government has long promoted the idea that it be able to appoint the police commissioner rather than the King and his Privy Council.