The Maori Council will today meet allies, including representatives of the Maori King, as it considers Finance Minister Bill English's challenge yesterday to take the water rights fight to court in the next week.

The council is also in discussions with legal heavyweights, including former deputy Solicitor-General Matthew Palmer, who may lead its legal challenge.

Prime Minister John Key yesterday confirmed Mighty River Power, which is to be partially privatised next year, would officially cease being a state-owned enterprise next week when an Order in Council on October 23 removed it from coverage under the SOE Act.

Mr Key acknowledged that was likely to prompt court action to block the sale from the Maori Council which took a claim to the Waitangi Tribunal for that purpose earlier this year.

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But Mr English welcomed that prospect.

The Order in Council was, he said, "a pretty clear signal to anyone who wants to prevent the sale going ahead that the Crown is taking its first substantive step and if there's going to be court action we may as well get on with that and sort it out".

Mr English said he didn't want to pre-judge the nature of the court action but if it claimed the Crown hadn't met its obligations under the Treaty, "then we certainly believe that we have and someone going to court would have trouble succeeding on that basis".

Co-chairman of the Maori Council Sir Edward Taihakurei Durie said the Government's decision was "disappointing if unsurprising".

"It does appear that this matter is destined for the courts, not because that outcome is desired by New Zealand Maori Council but because the Government is refusing to progress resolution of the central issue - residual Maori proprietary rights."

Sir Edward said the council would meet representatives of the Maori King, Waitangi Tribunal water claimants and iwi to discuss a response.

Maori Council solicitor Donna Hall said a legal response before the Order in Council was passed was " a matter that's going to have to be looked at carefully".

The council was discussing the matter with two teams of lawyers, one led by Queen's Counsel Helen Cull and another by Mr Palmer, who quit Crown Law two months ago after failing to win the top job there.

Ms Hall said the council would be approaching various iwi for funding.

The final decision as to whether the challenge would proceed would be made by King Tuheitia, she said.

Mr Key confirmed the Government would not proceed with the Waitangi Tribunal's "shares plus" concept to address Maori claims over water.