UPDATED 6:41pm: Labour is set to initially back a New Zealand First Bill that would legislate against a potential crucial clause in the Trans Pacific Partnership free trade deal.

Fletcher Tabuteau's Bill would negate the ability of foreign companies to sue Governments over law changes that harm their business.

Labour Leader Andrew Little says they will support the legislation at its first reading as they have concerns about investor state dispute proceedings.

"The benefit of the bill New Zealand First is bringing is that it allows us to at least have a public debate about it, get some sophistication about it and work out where these clauses can apply and where they shouldn't apply."

Little is particularly concerned about the clause's impact on countries with developed judicial systems.

"In the TPPA for example, which would be an agreement affecting developed countries like the US and New Zealand, there is no need for an investor State dispute settlement procedure. We think there needs to be more sophistication about the use of that sort of clause."