"The place of the Māori Health Authority in the future health system is important not only for Māori, but for all New Zealanders.
"Tā Mason's appointment is a significant step in the reform programme as we seek to deliver better outcomes for all, in partnership."
The authority, announced as part of a range of health reforms by Little in April, has been the subject of much scrutiny.
The blueprint says the authority would be the lead commissioner of health services targeted at Māori and "act as co-commission for other health services accessed by Māori, working jointly with Health NZ to approve commissioning plans and priorities".
This element of Māori having a say over funding decisions and so-called "veto" powers around general health decisions have been the target of vehement criticism from National leader Judith Collins, who likened it to "separatism".
Little has defended functions of the authority, saying it represented partnership, a key principle of the Treaty of Waitangi, and was vital for Māori to turn around hugely inequitable health outcomes, including the fact Māori die on average seven years earlier than non-Māori.
Under questioning from National in the House, Little said the proposal wasn't for two different systems - but for one system with two partners who will have to agree.
He said each partner was independent - the Māori Health Authority would provide leadership for their people and issues - but they were not in competition because it was one system as a whole with a common endeavour for a healthy New Zealand.
"The performance of the health system is leaving Māori woefully behind and that's not acceptable any more."
He cited the Treaty principles about partnership and equality.
"That is what we must strive for."
Debates over the authority between Collins and Prime Minister Jacinda Ardern during question time in the House became heated at times.
After avoiding answering questions around the "veto" powers, Collins said: "If she's so concerned about using the term 'veto', then why is it in the health Cabinet paper that her minister took to Cabinet, and why did he say yesterday there are two vetoes?"
To which Ardern responded: "My question is why can the member not say the word 'partnership'?"
Soon after, Māori Party co-leader Rawiri Waititi raised a point of order: "I'm wondering why two Pākehā women are talking about Māori issues when they're not talking to Māori themselves. There's a room full of us."
Durie's role would be advising on leaders to provide "high-quality governance support" to the interim Māori Health Authority, and on how it would be accountable to both the Government and Māori in driving improvement in hauora Māori, Associate Health Minister Peeni Henare said.
"He has spent his life working at the forefront of hauora Māori innovation – and so it is right that he help us ensure that the Māori Health Authority continues to be transformative.
"I can't think of anyone who is better qualified or has greater mana in this area than Tā Mason."
The steering group will be in the Department of the Prime Minister and Cabinet and focus on appropriate board appointments with a mandate from Māori and advising governance and accountability arrangements.
Henare said the Government was aiming to confirm board members by September.
Te Rūnanga o Ngāti Toa chair and host of this week's National Iwi Chairs Forum Dr Taku Parai said the Māori Health Authority had been a key topic of discussion.
"It is in the early days and a whole lot needs to be sorted out, but the kaupapa is a very important one."
Parai said Durie's appointment was "a very good move".
"He certainly has the track record. It is important whoever comes onto the board has a clear understanding of our worldview in approaching health and the holistic approach."
Durie, 82, was on Monday made a member of the exclusive Order of New Zealand at a ceremony at Government House in Wellington.
Durie - of Rangitāne, Ngāti Kauwhata, Ngāti Raukawa - was New Zealand's second Māori psychiatrist, and has served on numerous boards and groups.
He was chairman of the ministerial taskforce on Whānau Ora, and was on the panel for the inquiry into mental health and addiction, released in 2018.
A Massey emeritus professor, he established and ran Massey's school of Māori studies for 14 years, was its first assistant vice-chancellor Māori, and was deputy vice-chancellor for three years.
He also played a key role in establishing health centres and Māori-focused health education, research and training.
He was made a Companion of the New Zealand Order of Merit in 2001 and knighted in 2010.
