Resources Minister Gerry Brownlee's dream of opening up some of the country's most sensitive lands to mining is in tatters, with the withdrawal this morning of prospecting and mining proposals over 7000 hectares of highly protected conservation land.

The announcement from Brownlee and Conservation Minister Kate Wilkinson represents a major defeat for Brownlee, who first floated the proposals last September, initially encountering only muted opposition.

However, the leak in March of proposals that included mining on Great Barrier Island and Coromandel Peninsula spelt their death-knell.

Brownlee announced instead that the government would now pursue aero-magnetic surveys of mineral potential in Northland and the South Island West Coast, both areas where communities and local councils are believed to favour the extractive industry developments.

The decision proved the government was listening, Brownlee said, after receiving 37,552 submissions on the proposals.

"Most of those submissions said we should not remove any land from Schedule 4. We heard that message loud and clear," he said. The consultation process had determined "where the minerals industry can and can't go."

Brownlee said the process had been valuable.

"I suspect few New Zealanders knew the country had such considerable mineral potential before we undertook this process, and I get a sense that New Zealanders are now much more aware of that potential and how it might contribute to economic growth.

"As many people have pointed out, around 85 per cent of the country is not protected by Schedule 4, and a great deal of that land has mineral potential.

"New Zealanders have given the minerals sector a clear mandate to go and explore that land, and where appropriate, within the constraints of the resource consent process, utilise its mineral resources for everyone's benefit," Brownlee said.

It is understood the mining sector advised the government it would not risk prospecting or mining in Schedule 4 areas of high political sensitivity, even if the opportunity arose, helping tip the balance against the proposals, which were already becoming strongly opposed by the Prime Minister John Key and influential colleagues such as Communications and Transport Minister Steven Joyce.

The political fall-out in the all-important Auckland market was particularly feared.

Wilkinson said the government would go ahead with its proposal to add 14 areas totalling 12,400 hectares of land to Schedule 4.

In addition, in the future all areas given classifications equivalent to current Schedule 4 areas, such as national parks and marine reserves, will automatically become part of Schedule 4.

"We wanted to allay the fears of some submitters that the government may consider allowing mining in national parks in the future by taking this possibility off the table. This is an added layer of protection for New Zealand's most highly valued conservation land," Wilkinson said.

A proposal to fund conservation projects with part of the proceeds of Schedule 4 mining will not proceed.

Proposals to have applications for access to Crown land for mineral development considered by both the land holding Minister and the Minister of Energy and Resources, as opposed to just the land holding Minister, will be adopted.

$4.3 billion - estimated value of gold and silver on Great Barrier Island.

$54 billion - estimated value of mainly gold and silver on Coromandel Peninsula.