The dispute over Thiel's citizenship follows reports that mega-wealthy Americans are eyeing the remote South Pacific nation as a "bolthole" should Donald Trump's presidency go disastrously wrong.
The government confirmed this week that German-born billionaire Thiel was granted citizenship in June 2011, just two months after donating NZ$1.0 million (US$730,000) to an official Christchurch quake disaster fund.
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English acknowledged Thiel did not meet the usual requirements -- living at least 70 per cent of the previous five years in New Zealand -- but said he was granted citizenship due to exceptional circumstances.
"New Zealand is a better place with Mr Thiel as a citizen," English told reporters.
He declined to detail the exceptional circumstances and dismissed as "ridiculous" suggestions New Zealand had sold citizenship to Thiel, who Forbes estimates is worth US$2.7 billion.
"It's not a case of whether wealthy people can jump the queue," English said.
"It's whether people have particular skills, particular contributions that don't quite meet the criteria."
The opposition Labour Party's immigration spokesman Iain Lees-Galloway said the case raised questions about whether the rich were receiving special treatment.
"I don't think that fits very well with New Zealand's egalitarian values," he said.
Thiel, who has reportedly retained his US citizenship, co-founded PayPal and was an early investor in Facebook.
The 49-year-old made headlines last year when he acknowledged secretly funding a lawsuit against gossip website Gawker, which years earlier had outed him as gay.
He bucked the trend in Silicon Valley by supporting Trump and is part of the president's transition team.
The New York Times said that after Thiel strongly supported Trump's America-first rhetoric, adopting a "backup country" appeared a typically contrarian move by the tech investor.