Winston Peters has told Parliament New Zealand's Islamic communities "must clean house" and it "should start with their own families".
He was speaking on Tuesday after Deputy Prime Minister Paula Bennett had introduced a resolution condemning the terrorist attacks in Manchester and offering condolences to the families of the victims.
The NZ First leader said it was known that two of the perpetrators arrived in Britain as immigrants.
"Families, friends and confidantes are turning the other cheek rather than turning these people in," he said.
"Our Islamic communities must clean house by turning these monsters in and it starts with their own families."
Mr Peters said New Zealand must avoid the "politically correct stance" that allowed communities to form and stand apart.
"It is we who must change, they say, not them... we must halt the slide and lead as a country before we in this country see a repeat of these attacks."
Mr Peters was criticised by the next speaker, ACT leader David Seymour.
"There will have to be a more serious and wider debate about when and whether such an event can happen here," he said.
"And it will have to be a debate without naked political opportunism, as we have heard from New Zealand First."
United Future leader Peter Dunne, who has previously warned against racial intolerance, said there were those who would use bigotry and intolerance "for every opportunity they can get".
Speaking before Mr Peters, Labour MP Grant Roberston said New Zealanders "should also show our support to the Muslim community here in New Zealand who are as appalled and disgusted by the actions of these terrorists as anyone else".
The Kiwi Muslim community has previously spoken out about and condemned the terror attacks in London on Saturday.
"It's completely unnerving [and] uncomfortable, simply because fellow New Zealanders get completely mixed up. They are terrorists, but we as Muslims get labelled with the same brush," Federation of Islamic Associations of New Zealand President, Hazim Arafeh told the AM Show.
"This ideology has been created elsewhere and it gets exported to us over the internet. So far I would say the risk in New Zealand is very, very minimal, but still one person carrying this ideology in New Zealand is one person too much."
"They are a bunch of lunatics who have completely taken verses out of the Quran out of context, built up their own destructive ideology and found a place where there is no rule of law to launch all of their ideologies."
Mr Arafeh said members of the community have been victim to anti-Muslim sentiment from other New Zealanders. But he said terrorists are attacking other Muslims too - those attacks just don't get the same degree of media attention.
Bashir Khan, The President of the Ahmadiyya Muslim Community in New Zealand, has sent sympathy to the communities affected by the attacks.
"Our hearts and prayers go out to those who have been affected, the bereaved and the victims themselves," he said.
"We will not let the terrorists divide us. Instead, we will stand united against all forms of terrorism and hate.
"[We will] continue to highlight that these actions and the perpetrators have nothing in common with the true Islamic teachings and the vast majority of the Muslims worldwide."
According to estimates by the Pew Research Centre, in 2010 estimates there were 1.6 billion Muslims in the world, making it the second-largest religion after Christianity.