Prime Minister Jacinda Ardern has banned all Government departments from using a firm of private investigators for spying.
It follows a Newshub investigation that found state-owned insurers Southern Response got the investigators from Thompson and Clark to snoop on victims of the Christchurch earthquake at the taxpayers' expense.
Ms Ardern says this was "totally inappropriate" and other Government departments should not be using them.
"Absolutely not. In fact, we had a brief discussion amongst a few Ministers this morning, to make sure that none of their departments are engaging Thompson and Clark in the same way," she explained.
"Their behaviour around spying and so on is totally inappropriate."
The ban could be wide-ranging, with Newshub obtaining documents that show Thompson and Clark say they have a "significant client base... including Government Departments, State Owned Enterprises and Crown Research Institutes."
Cam Preston, who was targeted by the spies while he was working on a legal case against Southern Insurance, wants them stopped.
"I think there needs to be an audit of all the Government departments and state enterprises and so on and so forth, that are using Thompson and Clark and other companies like them to do this sort of spying - and I think they need to be shown the door."
Thompson and Clark has a controversial history - spying on protest groups for state-owned Solid Energy nearly 10 years ago.
Greenpeace CEO Russel Norman says Thompson and Clark are still at it - spying on the charity's employees.
"Putting their own spies in activist groups, which I think most New Zealanders would find absolutely appalling that taxpayers' money is being used for that purpose," he said.
Prime Minister Jacinda Ardern said she's "seeking out that everyone assures themselves they are not being used for that purpose".
There was no comment from Thompson and Clark on Monday, but the Prime Minister is making her feelings clear that the spying must end.
Public sector watchdog the State Services Commission has already ordered an inquiry into the Southern Response spying.
However, with Thompson and Clark saying they are so widely used across Government, it must be considering widening the net to find out what other departments have used them - and what for.