Waikato Maori are happy, for the time being at least, for roadworks to resume on a section of the Waikato expressway near Meremere where Karu Tahi the one-eyed taniwha lurks.

Roadworks on a 100m section of the expressway were halted last Friday when Ngati Naho, a north Waikato hapu of the Tainui iwi, raised concerns about the presence of taniwha, spiritual creatures regarded as guardians of the Waikato River.

They live near Springhill Rd, between Meremere township and Champion Raceway.

Transit New Zealand ordered work to stop on the highway until a meeting could be held with Ngati Naho.

The two parties agreed yesterday afternoon that the work could continue, but further negotiations were necessary.

Transit regional project manager Chris Allen said the talks had been productive and Transit was pleased with the outcome.

"Essentially we agreed to a point in the road.

"We will continue to work south of this point, but not north until the issue is resolved."

Mr Allen said there were still some sensitive issues related to the presence of the taniwha and the impact the roadworks would have on it.

Ngati Naho spokesman Rima Herbert said negotiations would continue next week, but for the present time the hapu was happy for the works to continue.

"We don't want to hold up the project," he said.

"There are some issues around the taniwha that are still on the table at the moment. But there is a safe area in which Transit can continue."

Work building the 12km stretch of four-lane highway had only just restarted after it was stopped in September when sinking earthworks - parts of the highway are built across swamps - blew the $56 million construction budget.

Ngati Naho kaumatua Sonny Wara said Karu Tahi, who lived in a swamp, was the taniwha the hapu was most concerned about, but there were two other taniwha, Waiwai and Te Iaroa, which could be disturbed by the roadworks.

Mr Wara said that according to legend there is a taniwha and a chief at every bend of the river.