Immigration Minister Iain-Lees Galloway will re-consider the decision to grant Karel Sroubek residency.
He announced the backdown in Question Time in Parliament on Wednesday.
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"Shortly before Question Time today I become aware that information may exist that appears on the face of it to directly contradict information that I used and relied upon to make that decision," he told Parliament.
"I am now taking advice on my options and need to consider the veracity of the new information that has been made available to me."
Mr Lees-Galloway says he will "carefully consider the way forward from here".
Sroubek fled to New Zealand from the Czech Republic on a false passport in 2003, fleeing what he claimed were corrupt law enforcement officials, after allegedly witnessing a murder.
Sroubek soon became affiliated with Hell's Angels in New Zealand, and was imprisoned for importing drugs, among other charges. He was jailed in June 2016 for five years and nine months after a jury found him guilty of bringing Class-B MDMA powder into the country.
Immigration Minister Iain Lees-Galloway used his "absolute discretion" to cancel deportation liability and grant residency - but refused to explain his decision due to "privacy and legal reasons".
Prime Minster Jacinda Ardern defended Mr Lees-Galloway's decision on Tuesday, telling The AM Show it was a difficult one for him to make, and that Sroubek, also known as Jan Antolik, now has a "very clear understanding of the choices he is now making".
Although Mr Lees-Galloway has not disclosed any details of why Sroubek was granted residency, Ms Ardern suggested it has something to do with the threat to his life back in the Czech Republic. "Why else would a minister make a decision around a case like this?" she said.
But it's been reported that Sroubek has travelled back to the Czech Republic, despite his life allegedly being in danger there.
National Party leader Simon Bridges says if the reports are accurate, they show Sroubek has "duped" the Government.
"Because if you say this is some form of humanitarian basis because he can't go back because he's scared - well he did just that he went back, he wasn't scared," he says.
"I think that goes to the other thing we know - the reason they're saying 'we won't tell you why we did this'. It's because they know they've got no good reason; they were duped, they were naive and it's starting to come through very clearly."