The Auditor-General is to conduct an inquiry into a decision by Labour MP Shane Jones to grant citizenship to a Chinese businessman when he was a minister.
Mr Jones was stood down from his portfolios and front bench role on 23 May after leader David
Shearer asked Auditor-General Lynn Provost to look into the matter.
In 2008 as Associate Immigration Minister, Mr Jones overrode advice from officials and approved citizenship for Yan Yong Ming, also known to politicians as Bill Liu.
The inquiry will examine the policies and practices of the Department of Internal Affairs when advising ministers on citizenship applications, particularly regarding good character requirements.
It will also look at how and why Mr Jones made his decision, along with any other matters that may arise.
David Shearer says he welcomes the investigation as it will give Mr Jones a chance to clear his name.
Mr Shearer says it is also important to reassure New Zealanders that proper processes were followed.
Lyn Provost on Wednesday afternoon announced that the investigation will be carried out and has appointed Francis Cooke, QC, to lead the inquiry.