Fiji's opposition political parties have lashed out at New Zealand's prime minister, accusing him of appeasing the coup-installed military government.
Prime Minister John Key says the clause in the new constitution, which grants legal immunity to the 2006 coup plotters, is not a deal breaker for New Zealand.
The draft of a new constitution was released two weeks ago, and will pave the way for Fiji's elections in 2014.
Mr Key told local New Zealand media that the constitutional pardon was a compromise.
"Practically, I don't think there's any way you're going to get a constitution and elections held without it. It's a kind of price for taking the next step," he said.
"It's not a deal breaker from our point of view. We might not like it but it's not a deal breaker."
Mr Key's statement has been backed up by the New Zealand opposition, with Labour Party foreign affairs spokesman Phil Goff saying immunity might be a price worth paying if it helps return democracy to Fiji.
But spokesman for the United Front for a Democratic Fiji, Mick Beddoes, has rejected both men's statements.
"We don't accept his suggestion that it shouldn't be a deal breaker," Mr Beddoes told .
"It's simply going to open, and pave the way for more coups to occur in Fiji, because you can always be assured, of giving immunity and you not have to will not have to face prosecution," he said.
Mr Beddoes says that Mr Key's comments sends a signal that New Zealand condones violent uprisings.
"The signal it's sending out is that New Zealand thinks it's okay to indulge in armed insurrection if you're not happy with the outcome of a democratic election".
Meanwhile, leaders meeting at the Pacific Islands Forum Leaders Meeting in the Marshall Islands say they will be discussing a resolution on Fiji at the meeting.
Fiji has been suspended from the forum since 2009 and each year there is some disagreement about when Fiji should be allowed back into the group.
"Whether we can change the current status of where Fiji is, at the moment, I don't know," the President of Kiribati, Anote Tong said.
"That's something that we will again argue. We always argue over this at the retreat. You won't hear us arguing but we do," he said.
New Zealand will be arguing against inviting Fiji back into the forum.
"It should be a strong message that says they've taken some of the right steps in terms of the constitutional reform. The next really important step is holding free and fair elections," New Zealand's prime minister John Key said.
"I'm not of the view that Fiji should be allowed back into the Forum or there should be a dramatic change in the approach taken by the Forum until they actually hold those elections," he said.