“We designed it and they borrowed it and if we wanted to clear the matter up they should change their flag,” Peters told reporters.
“It must be patently obvious that all over the world people are confused. I’ve been in places like Turkey and elsewhere where they’ve confused our countries on the basis of those flags. It’s not helpful.”
Both the New Zealand and Australian flags are dark blue with the Union Jack emblem of former colonial power Britain in the top right corner.
The only major difference is that the Australian version has six white stars, five representing the Southern Cross, while New Zealand depicts the constellation with four red stars.
Peters, who is temporarily leading the country while Prime Minister Jacinda Ardern is on maternity leave, feels strongly about the flag issue.
The 73-year-old also raised it earlier this week, complaining “we got there first with this design”.
Opposition leader Simon Bridges ridiculed Peters’ flag preoccupation, accusing him of populism and labelling him “a poor man’s Donald Trump”.
Bridges said New Zealanders he had spoken to were concerned about topics such as the economy and healthcare.
“They never raised with me changing the Australian flag. That’s weird by even his (Peters’) standards,” he told parliament.
New Zealand adopted its flag in 1902, while Australia’s was not officially recognised until 1954.
However, the Australian version had been used informally since 1901 and both countries say similar designs were common throughout the late 1800s.
New Zealand held a referendum on changing its flag to a silver fern design in 2016, with the proposal defeated 43% to 57.