Race Relations Commissioner Meng Foon says Shane Jones' comments about Indian immigrants are racist and ignorant, and must stop.
The New Zealand First MP and Cabinet minister Jones said Indian students had ruined academic institutions, and there were too many immigrants from New Delhi.
Jones received a very public and blunt message from Prime Minister Jacinda Ardern that his comments were "loose and wrong".
Commissioner Meng Foon said the comments were irresponsible and emboldened those who held racist and xenophobic views.
Foon said the anniversary of the 15 March Christchurch mosque shootings was a reminder of the ugliness of racism and hate.
He said Jones' comments were an affront to this important date when New Zealanders should be coming together to support one another.
Ardern said she spoke to Jones over the phone this morning.
"I've shared with him privately what I've shared publicly I also see he acknowledged that I'm right and I'm willing to leave it at that," she said.
Ardern said she hadn't seen Jones' comments doubling down on his view about Indian students.
Ardern said people should remember that we are in an election year.
"He does face consequences but here you're asking me to take an action on an area where a member of another political party stands in direct opposition to a view that I hold.
"This is MMP we will have disagreements as parties in parliament, it's the nature of our democracy.
"But again, I do feel a responsibility as the leader of New Zealand to say that I believe his comments were not only wrong, but bad for New Zealand," Ardern said.
New Zealand First leader Winston Peters has rejected criticism that Jones' comments were racist.
"Mr Jones was mirroring the comments that Indian people have passed onto us. So they couldn't be racist in that context can they?
"I'm talking about over a long period of time how the Indian people were concerned about what was going on in export education," Peters said.
But Greens co-leader James Shaw said Jones' comments were racist, and cynical and he did not want to give them any oxygen.
"I think in an election year it's incumbent upon politicians right across the political spectrum not to use immigrants, particularly those vulnerable to exploitation, as political footballs," he said.
Immigration Minister Iain Lees-Galloway said Jones' comments were indefensible and they did not represent government policy.
"I think it would be very helpful if people who spoke about immigration policy from this government were the prime minister and the immigration minister," he said.
Lees-Galloway was initially hesitant to say he thought they were racist, saying that if he was in the Indian community he "probably would feel that they were racist".
However following Question Time, he said he did feel they were racist comments.