Labour leader Andrew Little has admitted he was wrong when he said two months ago that John Shewan advised the Bahamas government on how to maintain the islands' tax haven status.

Photo: RNZ / Rebekah Parsons-King;

Mr Shewan has been appointed by the government to review New Zealand's rules on foreign trusts.

Mr Little said when he was appointed that the appointment cast doubt on the Prime Minister's judgement.

The Labour leader now says that after meeting with Mr Shewan, he accepts his explanation that while he advised the Bahamas government on tax matters he did not advise it on how to maintain its tax haven status.

Mr Little said statements he made in April were based on a report in a Bahamas newspaper.

At the time of Mr Little's original criticism, Mr Shewan told RNZ News the trip to the Bahamas had absolutely nothing to do with its status as a tax haven, and any suggestion of that was complete nonsense.

He said that the prime minister of the Bahamas had asked the New Zealand government to provide people to assist with putting GST in place in the Bahamas.

The review of New Zealand's rules on foreign trusts which Mr Shewan has been appointed to do, follows the release of the so-called Panama Papers, an international journalism investigation based on millions of leaked documents from Panamanian law firm Mossack Fonseca.