Little said legislation to be introduced in Parliament will be "passed under urgency".

"We need to protect the integrity of our elections. These changes will reduce the risk of foreign money influencing our election outcomes."

The legislation will contain a minimal threshold of $50, Little said, to "ensure that small-scale fundraising activities such as bucket donations and whip-rounds won't be affected".

Political party donations of more than $15,000 are currently required to be declared under the Electoral Act. The threshold for anonymous donations to candidates is lower at $1500.

But there is no requirement for political parties to report the amount of foreign donations under $1500, therefore the public has no idea how many overseas donations come in under that amount.

Concerns have been raised about how it could be easy for a foreign state to funnel funds into a political party from a large number of foreign donors, all under the $1500 threshold.

What will the law change mean?

Foreign donations more than $50 will be banned

Political party secretaries will be responsible for making sure donations are from locals

Political party secretaries must reside in New Zealand

Anonymous online political advertisements will be prohibited

Online advertisers will have to say who they are, the same as if the ad was published in a newspaper

The Green Party is welcoming the ban, with justice spokesperson Golriz Ghahraman saying it will help to "reduce undue influence from powerful vested interests and create a healthier and fairer system".

The issue of foreign donations have been a thorn in the National Party's side, ever since former National MP Jami-Lee Ross accused the party leader Simon Bridges in 2018 of committing electoral fraud.

Ross alleged that Bridges had asked him to split up a $100,000 donation from Chinese businessman Zhang Yikun into smaller amounts, so they could be hidden from the Electoral Commission.

The now-independent Botany MP released a recorded phone conversation between him and Bridges, where the former National MP could be heard asking his then-leader what to do with the $100,000 donation.

Ross said the funds, before it entered National Party accounts, arrived in amounts smaller than the $15,000 disclosure threshold. He said the $100,000 donation "was offered by the donor directly to Simon [Bridges] on the 21st May".

Bridges has denied the allegations. A Serious Fraud Office investigation into the matter is ongoing.

There is support from within the National Party to ban foreign donations. National MP Nick Smith delivered a speech earlier this year strongly advocating for it.

The National Party will support the legislation, a spokesperson said.

Foreign interference in general election

The Government Communications Security Bureau (GCSB) and New Zealand Security Intelligence Service (NZSIS) have confirmed that foreign interference in the 2017 general election by a state actor "was, and remains, plausible".

At an April select committee hearing, NZSIS director-general Rebecca Kitteridge told the Justice Select Committee the impact of "perceived or actual foreign interference" in New Zealand could be "potentially serious".

But at another select committee in August, Kitteridge threw doubt on the Greens' call for a foreign donations ban, saying she doubted it would lead to greater transparency.

"From the intelligence we have, we know that a foreign donation ban would not on its own be an effective way of mitigating the risks New Zealand candidates and MPs face," Kitteridge said.

"You can see how a foreign actor could easily use a proxy to work around such a ban. We know that foreign states are adept at understanding and working around regulatory regimes."

The Justice Minister said the new ban will have a requirement that party secretaries and candidates must take reasonable steps to ensure that a donation, or a contribution to a donation over the $50 foreign donation threshold, is not from an overseas person.

He said the Electoral Commission will issue guidance on what reasonable steps they might take to check the origin of the donations.

Political party secretaries will also have to reside in New Zealand, to make it easier to enforce parties' compliance with the donations rules.

It also extends the requirement to include name and address details on election advertisements to apply to election advertisements in all mediums.

"We've seen in other countries an avalanche of fake news social media ads that contain no information about who is behind them," Little said.

"That's not fair and we don't want to see it repeated here."

He said anonymous online advertisements "aimed at interfering with our democracy" will be prohibited. If someone wants to advertise online they need to say who they are, the same as if the ad was published in a newspaper.

The Justice Select Committee is yet to report back on the risk of foreign interference in New Zealand from its Inquiry into the 2017 General Election and 2016 Local Elections.