Immigration Minister Peter Dutton is standing by his decision to revoke the visa of a Maori infantryman who was decorated for his service in Afghanistan and has no criminal record in Australia or New Zealand.
The decision has prompted supporters to set up a petition calling for the decision to be overturned and complaints in the New Zealand Parliament.
Marama Fox, a member of the Maori Party, described the decision as abhorrent and embarrassing, declaring: "I think the Australian government has forgotten what the Anzac spirit actually means. They are treating Kiwis in Australia as less than second-class citizens."
Ms Fox raised the issue with New Zealand's Prime Minister John Key in their Parliament on Tuesday and was planning to table details of the man's war record on Wednesday. Mr Key said he was unaware of the case.
It has since emerged that Mr Key shook the hand of the former soldier, Mr Ngati Kanohi Haapu, who is better known as Ko, when the New Zealand prime minister visited troops in Afghanistan. It is also asserted by Ko's supporters that he was assigned to the detail protecting Mr Key during the visit.
Former New Zealand soldier, Toby Costello, had collected almost 500 names after starting a petition on Wednesday, many from former comrades of Ko. "He's a really nice dude and he doesn't deserve this," Mr Costello said.
"He's a morally upstanding person."
A spokesman for Mr Dutton said it was open to Ko to challenge the decision, but declined to offer specific reasons why the visa had been revoked.
"A person does not pass the character test if the minister reasonably suspects that the person has been or is a member of a group or organisation which has been involved in criminal conduct," he said.
"The minister can rely, not only an individual's criminal record, but also on protected information from the Australian Crime Commission, the Australian Federal Police and other intelligence agencies."
Ko was involved in four serious incidents during his deployment, including one where one of his comrades died and two were seriously injured.
He received three medals of honour before leaving the military in 2012 and moving to Australia, where his supporters say he formed a relationship with a woman, became a father figure to her son and found work as a fly in, fly out worker on the West Australian mines.
Ko was arrested last week while visiting a friend at Casuarina Prison and had his visa revoked, apparently on the basis that he is a member of an outlaw motorcycle club, the Rebels, which is not a criminal organisation in WA.
His lawyers believe Mr Dutton was unaware of his military background and lack of prior convictions in New Zealand or Australia. They are asking that he be released from prison pending a review of the decision to revoke the visa.
"Here is an example of somebody of unquestionable character, who has been picked up for no good reason that we can see, except that he belongs to a bikie club and he visited someone in prison," Ms Fox said.
"Do Kiwis need to be worried now that if they visit someone in prison, they will have their visas taken off them and be sent back to New Zealand?"
Ms Fox said the issue raised serious questions about Australia's bid to become a member of the United Nations' human rights council.
Ko's lawyers say he spent four days in solitary confinement at the Casaurina Prison, on the basis that he is security threat.
"It's hard to reconcile being seen as a security risk when he gave so much to the Anzac cause," lawyer Michael Pena-Rees said.