New Zealand's Prime Minister appears to be heading for a legal showdown with the Jewish community over a new law that bans the kosher slaughtering of animals.

The crisis, triggered by the May 27 decision to outlaw shechitah, prompted Jewish leaders to request an urgent meeting with Jewish-born John Key in an attempt to resolve the crisis. But the 30-minute meeting in Auckland last Friday concluded with the six-person delegation informing Mr Key that the small community would be left with "no option" but to take legal action "if there was no solution forthcoming".

Barring a last-minute reversal, the Conservative Prime Minister - who does not practise Judaism - faces an embarrassing confrontation in what has been described as a "test case" for shechitah. It is understood that the Kiwi community has engaged a Queen's Counsel and that legal action could be launched as early as next week.

The scandal erupted late last month when Agriculture Minister David Carter overruled advice from the National Animal Welfare Advisory Committee to exempt shechitah from a new Animal Welfare Commercial Slaughter Code.

Instead, Mr Carter decided "there are no exemptions" in the new code, mandating that all commercially killed animals must be stunned before slaughter to "ensure that the animals are treated humanely and in accordance with good practice and scientific knowledge".

Kosher meat can be imported from Australia, but no chicken is allowed in.

The crisis in New Zealand comes as the European Parliament voted last Monday to ensure all kosher meat is labelled "meat from slaughter without stunning".

The ban appears to have sparked a rift within the New Zealand community over the best strategy to manage the crisis, with some blasting the "softly, softly" approach taken thus far.

The fallout is also being closely watched in neighbouring Australia, where the Executive Council of Australian Jewry and the Organisation of Rabbis of Australasia have offered their assistance. In a diplomatically worded statement, ECAJ executive director Peter Wertheim said: "They are handling things in their own way and we are closely monitoring the situation. The denial of fundamental rights to kosher consumers in New Zealand has the potential for adverse effects further afield, including Australia."

But a senior leader said that several Australian Jewish leaders are far from satisfied at the performance of their Kiwi cousins.

"I'm terrified they've mismanaged it," he said. "They just don't have the expertise. The decisions made in New Zealand will have ramifications on how shechitah is viewed the world over. The anti-shechitah lobby won't want to lose a test case."

Shimon Cohen, a spokesman for Shechita UK, said New Zealand's Jewish leaders were in constant contact with the Office of the Chief Rabbi and Shechita UK.

New Zealand Jewish Council chairman Geoff Levy said attempts to resolve the crisis were continuing: "If we can settle the matter politically so much the better."

But he said a number of legal avenues were open to the community. The ban on shechitah appears to trample on several sections of New Zealand's Bill of Rights, which protects "the right to freedom of thought, conscience, religion, and belief" and "the right to manifest that person's religion or belief in worship, observance, practice or teaching".

The ban could also be in breach of the Animal Welfare Act, which contains provisions for religious rights, as well as the Human Rights Act, which protects against discrimination.

The meltdown in relations between the government and the small community deepened further last week when Mr Carter said in a speech: "We may have upset a relatively small religious minority, and I do appreciate their strong feelings for this issue but frankly I don't think any animal should suffer in the slaughter process."

However, New Zealand Jewish Council president Stephen Goodman said he had received an apology from Mr Carter for "any offence caused" by his remarks.