The Maori Council will today lodge a claim at the Waitangi Tribunal, asking it to stop the sales until the tribunal first considers claims to water.
The Government is pushing ahead this year with one of National's major election policies, to sell 49 per cent of four state-owned energy companies.
The plans are being met with resistance by Maori, and the Maori Council and some hapu will today file claims asking the tribunal to uphold Maori rights over the country's fresh water resources.
The council said that before the Treaty, Maori owned all the the fresh water and geothermal resources of the country, and the Crown had breached the Treaty by removing Maori ownership of the resources without compensation or consent.
Maori Council chairman Sir Graham Latimer and 11 hapu are filing the claim on behalf of all Maori, arguing they have a claim to a share in the four energy companies.
Once filed, the case can be taken to court.
The council is asking for compensation for losses in the form of the return of water resources or substantial shareholding for Maori in the Crown's four power generators.
Until a settlement is reached, the council is asking for the plan to partly privatise the four government-owned assets to be put on hold.
Sir Graham said yesterday he expected he had a fair chance of success in relation to his claim to stop pending asset sales.
Sir Graham took the government to court in 1987 over its plan to transfer Crown assets to state owned enterprises, a plan which he argued was prejudicial to treaty settlements.
Environment Minister Nick Smith told National Radio today that the Government hadn't yet seen the claim, and was taking a considered approach.
"I've got quite a concern about an argument of water being something that you can own any more so than air, and the risk of it being quite divisive. There's no question that Maori have got a very legitimate interest in the way in which water is managed.''
He said the Government had actively engaged with iwi to improve the management of fresh water resources over the last three years through a programme called the Land and Water Forum.
He said the Maori Council had not been to see him in the three years he had been responsible for the issues of fresh water.
Dr Smith said the Government was making progress on how fresh water was managed, and would continue to work with iwi over the water resources.
Prime Minister John Key has told iwi that the Government could yet agree to a Treaty clause in legislation on the partial sale of state assets.
Speaking at his annual Waitangi Breakfast yesterday he emphasised that his Government would not dilute its Treaty obligations and he was "very open minded'' about what will happen to the clause after consultation.
He said although the Government preferred a more specific clause, he would not rule out using a general Treaty clause such as section nine.
The issue of section nine dominated at Waitangi at the weekend - with protesters and the iwi leaders sending a strong message to National that they will not be happy it if did not also cover the mixed ownership model companies.
Maori Party co-leader Pita Sharples has also reiterated that the party will walk out on National if the situation can not be resolved, and the party yesterday called on iwi leaders to challenge the asset sales in court using section nine.
Labour leader David Shearer said it was becoming increasingly untenable for the Maori Party to stay with the Government.