A swamp-dwelling taniwha has halted work on part of the Waikato expressway near Meremere after iwi pointed out its presence.

Transit New Zealand has ordered a stop to work on 100m of the highway project until a meeting can be held with the north Waikato hapu Ngati Naho, a subtribe of Tainui.

The taniwha is said to live near Springhill Rd, between Meremere township and Champion Raceway.

Taniwha are spiritual creatures regarded as guardians of the Waikato River. In Tainui legend a taniwha or chief is at every bend of the river.

Meremere resident Brenda Maxwell, who is not Ngati Naho, said she had warned about taniwha during consent hearings over a nearby landfill.

"We've been screaming out for two years about this. What they're doing is trying to cut costs," Ms Maxwell said. "In order to do that they're willing to trample on our culture. Get away from the swamp. It's as simple as that."

Maori believed fatal crashes common on State Highway 1 were linked to the taniwha.

Transit regional projects manager Chris Allen said consultation had thrown up several other taniwha "but this is the first time we've heard about this one".

The issue had been dealt with under the same protocols as for found human remains, and work had stopped in the immediate area.

Efforts to build the four-lane highway over the area's deep swamps have only just restarted with a $6.5 million earthworks contract.

Work on a 12km stretch across the swamps stopped in September after sinking earthworks blew the $56 million construction budget.