Key was heard to have said the football star was "thick as bat s**t" on a recent visit to a school in Auckland.
While discussing an exhibition match between Beckham's team LA Galaxy and the Oceania All-Stars which took place in 2008, he is said to have described the sportsman as handsome and "a really nice guy" before adding the offending remark.
A spokesman for Beckham refused to comment on the matter today.
Mr Key was not available for comment, but told breakfast television: "That is someone that thinks they have overheard a conversation I have had.
"I am not going to engage in that because otherwise I am engaging in every conversation that someone thinks I have."
Asked if that meant he was denying he had called Beckham thick, Mr Key said: "No, what I am saying is that somebody has overheard a personal conversation and that's their recollection of it.
"I am just not going to engage in discussions about that. That's their view."
Many have taken to Twitter to comment on the apparent gaffe, with one user writing: "John Key is quickly becoming to New Zealand what Borat was to Kazakhstan."