The chief judge of New Zealand's High Court has ruled that internet millionaire Kim Dotcom can seek damages against a government spy agency and the police.

The ruling may bolster the internet tycoon's fight against extradition to the US for alleged copyright infringement and money laundering.

Earlier this year, the High Court ruled that a police raid on the Megaupload founder's mansion in January relied upon illegal warrants.

The January raid saw New Zealand police helicopters swoop into Dotcom's mansion compound at the request of US authorities.

Since then, the Government Communications Security Bureau spy agency has conceded it unlawfully intercepted Dotcom's communications.

Now, Justice Helen Winkelmann has ruled the spy agency should be added as a defendant in Dotcom's action and should provide more information to his lawyers, despite the agency's concerns national security could be compromised.

The FBI accuses Dotcom, who founded the file-sharing site which housed everything from family photos to blockbuster films, of leading a group that netted $175 million since 2005 by copying and distributing copyrighted content without authorisation.

ABC/Reuters