The company behind the sea floor cable connecting New Zealand's internet with the rest of the world says Labour's claims of a "catastrophic failure" are wrong.
The Labour Party says the Southern Cross Cable Network suffered the failure on Friday morning, showing how vulnerable the country's communication infrastructure is.
Southern Cross Cable Network is the Bermuda-based company that operates the figure-eight cable link between New Zealand, Australia and the United States, via Fiji and Hawaii.
The "catastrophic" failure - because of an unauthorised and un-notified software change - happened at the Alexandria landing station in NSW on Friday morning, said Labour communications and IT spokeswoman Clare Curran.
"We understand that partial service has been restored by reinstating old circuits via New Zealand. Full restoration is still being worked on."
But Southern Cross said Ms Curran's claims were inaccurate and misleading.
Sales and marketing director Ross Pfeffer said upgrade maintenance was being carried out during a low-traffic period when a problem meant there was a limited outage affecting 10 per cent of capacity.
The switch had reverted to the original software. Four customers were affected for just over an hour on Friday morning, he said.
Ms Curran said the incident showed the government's inaction and disregard for international infrastructure could have catastrophic consequences for New Zealand.
A private plan to build a $400 million 13,000km fibre cable between Auckland, Sydney and Los Angeles - dubbed Pacific Fibre - was abandoned in August due to lack of funding.