The Government will not be able to strike out GE-free areas set up by councils under an agreement between National and the Maori Party.
Under Resource Management Act reforms being debated in Parliament this week, the minister will be given powers to override councils' plans and decision-making.
As a condition of its support, the Maori Party demanded a "carve-out" for genetic modification which would allow regional authorities to declare their areas GE-free.
The provision is limited to GE crops. The minister will be able to step in if councils try to ban GE animal trials, which can be used for innovative medicines.
There was disagreement in Parliament about whether the definition of crops in the legislation included grass and forestry - the two areas in which New Zealand scientists are considering genetic modification.
Maori Party co-leader Marama Fox said the provision had deliberately been drafted so that it covered pastures and trees.
Labour's environment spokesman David Parker, on the other hand, claimed that the provision only covered fruit, vegetables and cereals. The Maori Party had conceded an own goal in its deal with National, he said.
Environment Minister Nick Smith said the definition of crops would "ultimately be one to be determined by the courts".
He added: "In terms of what type of plants would fall into that category, then those definitions would fall back to the provisions that are in other statutes."
Federated Farmers, one of the biggest proponents of GM technology, is challenging two councils in court over their GE-free policies.
President William Rolleston said it would be significant if GE trials of forestry or grass were blocked by the bill.
"These will have incredible environmental benefits, he said. 'In my view, we're just way past the fundamentalist franken-food type of discussion."
Agresearch is trialling GE ryegrass in the US which is designed to be healthier for animals and have less impact on the environment. Crown Research Institute Scion is looking at ways to improve the quality and rotation times of pine trees through GM technology.
Soil and Health New Zealand, which lobbied for the GMO provisions, welcomed the RMA changes secured by the Maori Party but said they did not go far enough.
Chairwoman Marion Thomas said the group had wanted councils to be able to ban animal trials as well.
Smith has previously said that this could block successful and innovative medical advances, including a new liver cancer treatment being used in Auckland.
While the minister will be unable to overrule GE-free zones, he retains significant powers to intervene in other activities by councils.
Smith downplayed concerns about his new powers, saying they would be used to ensure the RMA was not duplicating rules which were covered in other statutes.
"Under the building act, we stipulate what the insulation requirements are and sometimes to councils have wanted to overrule that.
"In areas such as earthquake prone buildings, some councils don't necessarily agree with the Government's view of the definition on an earthquake prone building and attempt to overrule it through the RMA."
Parker said the minister's powers had only been reduced "a little" by the Maori Party's lobbying, and he was still able to "override local democracy by knocking out or amending rules in District or Regional RMA plans".