Former NZ First MP Brendan Horan won't resign from parliament and is stunned by his "bombshell" expulsion from caucus, his lawyer says.
Mr Horan is embroiled in a family scandal and has rejected allegations he misappropriated money from his late mother's estate.
Party leader Winston Peters told parliament on Tuesday he had received "substantive material" relating to the allegations, some of it as recently as 2.15pm.
"The information I have received leaves me in a position where I have no confidence in Mr Horan's ability to continue as a Member of Parliament and he will be expelled from the New Zealand First caucus forthwith," he said.
"Mr Horan has a duty, I believe, to resign as a Member of Parliament."
Mr Horan's lawyer, Paul Mabey QC, says the MP has no intention of resigning.
"He sees no reason to leave because he has done nothing wrong," Mr Mabey said on Radio New Zealand.
"He had no idea this was coming. He hasn't been shown the material."
Mr Mabey says he will talk to the MP on Wednesday.
"Right now he is dealing with the bombshell delivered in parliament... it is very stressful."
Mr Peters told reporters he deliberately used parliamentary privilege to make the announcement.
"I'm not going to be subject to people spraying defamation writs that cost you a fortune, no matter how correct you might be," he said.
Mr Peters acknowledged he had judged Mr Horan.
"Yes, I have, because that's the position I'm in and I've got to take it deadly seriously."
Mr Horan's half-brother, Mana Ormsby, has alleged thousands of dollars were misappropriated from Olwen Horan's bank account before she died in August, aged 87.
Mrs Horan won about $1 million in an Australian lottery in August 1999, and in February 2007 she had $259,000 in her account.
When she died there was just $3000 left.