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At a press conference Prime Minister Bill English gave a statement regarding the controversy surrounding Clutha-Southland MP Todd Barclay and his choice not to stand in the upcoming General Election. 

Mr Barclay realised how the controversy was affecting the party, Mr English said, adding the MP had made the right call - which was made by Mr Barclay.

Mr English again defended his own actions, saying he made a statement to the police.

"The significance of what he told me is really a matter for police."

Mr English said he would stand by that statement if police do reopen the investigation.

He did not accept taxpayer money had been paid to Ms Dickson as "hush money".

"I don't accept the assertion that nothing was done about it. I reported it to police. It was communicated openly."

Asked if he had any regrets, Mr English said: "My main regret here is that people that I know well fell out so badly and it's been an ongoing problem in different formats. It's a shame that it's ended up in this situation."

But Mr English said the scandal was not damaging.

National MP Todd Barclay announced earlier today he would not stand as the candidate for Clutha-Southland in the 2017 election - but would stay in Parliament until then.

• Earlier story: Pressure on Barclay to resign

"I got into politics because I was inspired by the people I worked for: Bill English, Gerry Brownlee and Hekia Parata. I wanted the opportunity to make my contribution too," Mr Barclay said.

"I don't want the issues that are important to Clutha-Southland and all of New Zealand to be distracted by an employment dispute.

"This has been a hard decision to make, but it is in the best interests of our government and the National Party, and I wish the Prime Minister and our team all the best for the General Election."

Mr Barclay's executive assistant and staff were in tears shortly after the statement was sent out.

Mr Barclay said he wanted to pay tribute to his friends and colleagues in the party and caucus, particularly Invercargill MP Sarah Dowie.

He said being elected Clutha-Southland MP was the proudest moment of his life, and it was a privilege to serve the people in the electorate.

Staying on as an MP for the rest of the term will ensure National maintains its current majority. The election is on September 23.

He faced pressure to step down after yesterday's bombshell admission by Prime Minister Bill English showed the MP had misled the public.

Todd Barclay

Mr Barclay last night confirmed Mr English's statement to police was correct, and apologised for making "misleading" statements earlier in the day.

Earlier today police said they were assessing recent information in relation to their investigation of Mr Barclay.

Assistant Commissioner Richard Chambers confirmed the review of information to the Herald this morning.

"NZ Police are assessing the information that has been discussed publically in recent days in relation to any impact on the findings of the original Todd Barclay inquiry."

Police closed a 10-month investigation after Mr Barclay's former electorate agent, Glenys Dickson, claimed he secretly recorded her conversations, saying there was insufficient evidence.

That was despite Mr English providing a statement that Mr Barclay told him he left a dictaphone running in his electorate office, recording his staff.

Mr Barclay declined to be interviewed by police, and told media he refuted the allegations.

However, after Mr English released his police statement yesterday, Mr Barclay read a short statement to media saying he regretted "misleading" statements, and he accepted Mr English's statement as correct.

In a further development last night, Newstalk ZB reported a private security firm was alleged to have put CCTV into Mr Barclay's electorate office, at his request, to observe a staff member.

Mr Barclay has been approached for comment. He is the deputy chair of Parliament's education and science committee, which is sitting this morning.

However, the Herald understands he has been excused from attending by party whips.

Finance Minister Steven Joyce today declined to back Mr Barclay, and said Mr Barclay's statements yesterday "didn't match up".

However, Mr Joyce told Mike Hosking on Newstalk ZB he expected Mr Barclay to still be Clutha-Southland MP by the end of today.

Asked if Mr Barclay was a liar, Mr Joyce said, "well, I must say, his two statements yesterday didn't exactly match up, did they? But that's for him to sort out, and it's actually for him to sort out for the party in Clutha-Southland."

Asked if he wanted Mr Barclay to quit, Mr Joyce said "I don't have a view on that".

This morning, Labour leader Andrew Little said Mr Barclay's statement last night - and refusal to answer media questions - was "an expression of arrogance".

"It didn't show any contrition at all about the impact on Glenys Dickson. Not even on his leader. And he turned on his heels and walked away."

Mr Little said it was clear Mr Barclay could not continue to be an MP. There was enough information now for police to re-open their investigation.

He said it wasn't clear why Mr English had continued to "effectively be part of the cover-up".

"There clearly is something going on inside the National Party. And it seems to be not just with the politicians, it will be at the board level, at the party official level. But something is now being exposed."

"For Bill English, the more this goes on, his credibility - which has been damaged - [it] will only get worse for him until action is taken against Todd Barclay."

Police tried to speak to Mr Barclay after claims in 2016 that he had recorded Mrs Dickson, his senior electorate agent, without her knowledge, which he denied.

Mr Barclay told reporters he would co-operate with the police but his lawyer later said he would not. The investigation was dropped because of a lack of evidence and in March this year it was revealed that Mr Barclay had refused to co-operate.

It is illegal to intentionally intercept by means of an interception device private communications you are not party to.