The ownership of Taniwha Springs has been handed back to Ngati Rangiwewehi in an "historic decision" made by Rotorua Lakes Council.
Councillors voted unanimously during an ordinary council meeting on Thursday night that the ownership of the Ngongotaha springs be transferred back to the iwi.
Every seat was filled in the council chambers and the room erupted with applause when the decision was made.
Councillor Trevor Maxwell said this decision was, in his 36 years on council, "probably one of the most important things for me personally, that has happened".
Councillor Merepeka Raukawa-Tait thanked Ngati Rangiwewehi for their contribution to the city.
"It is a historic occasion this evening but it is one that could have happened many years earlier.
"I don't look at Ngati Rangiwewehi as the former owners, I look at them as the original owners. I never saw them giving up their ownership, I don't see it being transferred back to them, it was always theirs.
"Seven years ago we applied for another 25-year resource consent - had [Ngati Rangiwewehi] not taken our council to the Environmental Court their mokopuna (grandchildren) in another 15 years time would be sitting here dancing around with us trying to get justice."
In 2008, after a four-year battle with iwi, the council was granted resource consent to continue taking water from the springs for another 10 years.
In the 2012 Ngati Rangiwewehi Settlement, the Crown acknowledged that the taking of the land was felt by Ngati Rangiwewehi to be "the greatest grievance they bear against the Crown".
That same year, central government approved a grant of $1.075 million to Rotorua Lakes Council to help with investigating and establishing an alternative water supply.
The decision to transfer ownership to iwi includes an easement allowing the council to continue taking water until 2018.
Ngati Rangiwewehi leader Te Rangikaheke Bidois said it felt good the decision had been made.
"It was so nice to hear the vote - it feels real now. It was good to hear councillors express their support as well as their apologies for what had gone before.
"We have all turned corners and the council has shown in good faith their commitment to working with and respecting our iwi."