The auditor-general should step down while extensive fraud that happened under his watch is investigated, New Zealand First leader Winston Peters says.
Martin Matthews was the Transport Ministry's chief executive when ministry employee Joanne Harrison stole nearly $750,000.
The Labour Party and United Future is also calling for an independent inquiry into the extent of the fraud.
Mr Matthews was repeatedly alerted to what senior management regarded as Harrison's "astounding" behaviour, but for years did not act.
Politicians who appointed him as auditor-general say they were never made aware of the full scale of the fraud.
New Zealand First leader Winston Peters was furious Mr Matthews' lack of action was not made clear to politicians when they appointed him as auditor-general.
"The auditor-general himself, I believe, must stand down until a full-scale inquiry gets to the end of this matter."
Labour leader Andrew Little said the failures at the Transport Ministry were disturbing and, given the ongoing revelations, it would be more appropriate for the State Services Commission to investigate exactly what went on.
Prime Minister Bill English said it would be a drastic step for Mr Matthews to step down.
While he was not familiar with all the details of the case, it had been dealt with satisfactorily, which showed the system was able to pick up problems, he said.
Any further investigation would be done by the State Services Commission, he said.
State Services Commissioner Peter Hughes refused to be interviewed but said Harrison's fraud had been "the subject of a number of independent reviews which have considered all the available information".