Authorities are scrambling to assess damage and respond to reports of injuries after the first, 7.5 magnitude earthquake centred near Hanmer Springs.
"On the best information we have, there have been two fatalities," Mr Key told a media conference early this morning.
Earlier, police said one person had died in Kaikoura, where a house had collapsed in the earthquake.
Police said they were also trying to get to a property at Mt Lyford, north of Christchurch, where a second person is believed to have died.