Maori tribes may be given legal title to parts of the foreshore and seabed separately or jointly with the Crown if the Government adopts the suggestions of its ministerial review panel.
The panel's report, issued yesterday, describes the Foreshore and Seabed Act as severely discriminatory to Maori and "the single biggest land nationalisation statute enacted in New Zealand history".
It recommends immediate repeal of the act and vesting of foreshore ownership "in trust" with the Crown while questions over the extent of iwi rights and how they can be recognised are resolved.
Possibilities include establishing reserves over which hapu would have full control or co-management roles.
"As we see it, once the respective rights have been resolved in any particular area of the foreshore and seabed, the beneficial and perhaps the legal title for the area would be held by the entitled hapu or iwi, or the Crown, or both jointly ... "
Of the four options the panel offered, it favoured resolution of ownership and rights by negotiations between iwi and the Crown, nationally for overall policy and locally for particular hapu and areas of the coastline.
Simply repealing the act and reverting to the pre-2004 procedure under which iwi went to the Maori Land Court and High Court would be "protracted, laborious and expensive and could result in an unmanageable patchwork of litigation".
The panel said any option should include protection of public access to beaches.
Attorney-General Chris Finlayson said he expected to give an initial Government response by the end of next month.
He said the act had been a cause of discord for five years and a "just and durable" settlement was needed.
Prime Minister John Key had stipulated that guaranteed public access was a bottom line for the Government, and Mr Finlayson said the report acknowledged that.
The panel, chaired by former High Court judge Eddie Durie, said new policy should start with the assumption that hapu and iwi held customary title over the foreshore and seabed.
It was an "open question" whether customary interests should be treated as exclusive ownership, complete with rights to income from commercial activities such as mining, and such a question could be addressed only through negotiations between the Government, the public and affected iwi.
Maori Party co-leader Tariana Turia said the report did not contain any quick-fix solutions, but was a strong starting point.
She expected a replacement policy by the end of this term of government, in 2011.
Co-leader Pita Sharples said the Maori Party would have input into the Government's response and he hoped it would be an "agreed position".
Dr Sharples said it was important to address any public misgivings in the process.
"The previous Government frightened everyone from day one by telling them they wouldn't be able to have a barbecue at the beach. That was wrong."
Labour leader Phil Goff said his party would act constructively over the review.
* The history
The ruling: Court of Appeal rules Ngati Apa tribe can seek "customary title" over areas of foreshore and seabed through the Maori Land Court.
The response: Prime Minister Helen Clark vows to pass a law ensuring public ownership of the foreshore and seabed.
The hikoi: Opponents of the foreshore legislation march for 13 days from Northland to Wellington, reaching Parliament on May 5, 2004. The Foreshore and Seabed Act was passed on November 18, 2004.
The Maori Party: The act was a major factor in Tariana Turia's resigning from the Labour Party and working to establish the Maori Party.