Parliament yesterday passed the first reading of Te Awa Tupua (Whanganui River Claims Settlement) Bill with more than 200 Whanganui Iwi members there to mark the occasion.
Minister for Treaty Negotiations Chris Finlayson said the bill addressed historical grievances of Whanganui Iwi in relation to the river.
"Iwi have sought protection of the Whanganui River for over a century," he said.
"This bill recognises the deep spiritual connection between iwi and the river and creates a strong platform for their involvement in the future of the river."
The legislation will establish a new legal framework for the river, recognising it as an indivisible whole from the mountains to the sea, known as Te Awa Tupua.
Te Awa Tupua will have its own legal identity with the corresponding rights, duties and liabilities of a legal person.
Financial redress of $80 million is included in the settlement as well as an additional $1 million contribution towards establishing the legal framework for the river.
Gerrard Albert, chairman of iwi governance organisation Ng Tngata Tiaki o Whanganui, was among those present in Wellington.
"Since the first Crown incursions on the Whanganui River in the mid-1850s, which led to the destruction of p tuna (eel weirs) and utu piharau (lamprey weirs) and the clearance of many of the river's rapids, Whanganui Iwi have fought to have their rights and their relationship with the river recognised," he said.
He said the number of descendants who had travelled to Parliament to witness the first reading of the bill reflected the conviction and perseverance shown by the iwi for well over a century to uphold the mana of the river.
"That the longstanding claims are being concluded through a unique approach that reflects the iwi view of the river adds to the energy and excitement that the iwi is feeling."
Mori Development Minister Te Ururoa Flavell told Parliament that the bill could never undo "the decades of repeated degradation to these very special waters".
He said the iwi had been forced to watch the sustained misuse and exploitation of their ancestral waters.
"Fourteen Whanganui chiefs signed the Treaty of Waitangi in May 1840, and since that time the Crown has systematically undermined iwi rights and interests in the management and use of the river," he said.
"Breaches include exclusion from decision-making; concerns submitted through petitions on the impact of river 'improvements', river conservation and protection being largely ignored; and no consultation when the diversion of water from Whanganui into the Tongariro power scheme was authorised in 1958.
Mr Flavell said Te Awa Tupua would be recognised as a legal person - "This is world-leading legislation and we congratulate the architects of such a ground-breaking piece of work."
Mori Party co-leader Marama Fox said: "It is only right that the settlement will ensure that the Crown does not own the river bed, but that the river will own itself."
The bill has been referred to the Mori Affairs Committee and will come back before the House for a second reading before being passed into law.