The taniwha that stopped work on State Highway One this week has a second home further down the Waikato river.

Karu Tahi, the one-eyed taniwha, is one of three mythical creatures which live along the Waikato River, says Ngati Naho, a hapu of the Tainui iwi.

Its lair is a small swampy area about 1km south of the Meremere power station beside State Highway One, surrounded by a grove of protected kahikatea trees, lush grass and noisy cicadas - and right in the middle of the new Waikato expressway.

Spokesman Rima Herbert said Ngati Naho believed Karu Tahi, whose name means one-eyed taniwha, could move out of its boggy marsh when the river floods and into a second home further along the river, which is not on the route of any developments.

Taniwha, spiritual creatures to Maori, have been in the spotlight after work was halted then began again, though not around the disputed lair.

Negotiations between Ngati Naho and Transit will begin again next week.

Ngati Naho also believe in two other taniwha, Waiwai and Te Iaroa, which live north of Karu Tahi.

Waiwai, named after Ngati Naho ancestors, lives on the banks of the Waikato River, across the road from the Meremere power station.

Te Iaroa, meaning The Long Current, is believed to live where the Mangatawhiri River enters the Waikato River.

Its lair was not on the expressway route so gave Ngati Naho little reason for concern.

Further north, another reputed taniwha will be the subject of a Court of Appeal hearing on November 25.

The proposed Northland Prison at Ngawha could be delayed if an appeal is based on a taniwha called Takauere succeeds. He is described as a guardian of the waters, with the shape of a kauri log or an eel.

A group, including the Friends of Ngawha, has already unsuccessfully appealed in the High Court against an Environment Court decision to grant resource consents for the prison.

The Environment Court ruled on the taniwha, saying it respected the rights of people to believe in the spiritual, metaphysical taniwha, but the court was part of a secular state.

The Resource Management Act required it to consider the well-being of physical people.

"While respecting the freedoms of those who believe in Takauere, the members of the court are not compelled to find that the taniwha exists, or that its pathways and other characteristics would be adversely affected, if we are not persuaded by the evidence of those facts."

The taniwha was also raised as part of the Ngapuhi Waitangi Tribunal claim for the Ngawha geothermal resources in 1993.

Dr Ranginui Walker, former professor in the Maori studies department at Auckland University, said taniwha were embedded in Maori culture.

"It is cultural, just the same as goblins are part of European culture - it's the same sort of thing."

Vicki Hyde, chairwoman of the New Zealand Skeptics, who is part-Tainui and grew up with tales of the taniwha, said that in a multicultural society everybody's "ghosts should be treated nicely".

But she doubted a road would be stopped for a Pakeha ghost.

Most Government departments do not have policies for dealing with objections about building over or near taniwha.

But departments are required under the Resource Management Act to consider cultural concerns and taonga (treasures).

Transit, in charge of building the major roads around the country, says it had never come across a taniwha before building the Waikato expressway.

Transit is now working on stretches of the expressway away from the taniwha and will try to find a solution with iwi before it reaches Karu Tahi's home.

Mr Herbert, manager of the Ngati Naho Co-operative Society, said: "One of the things we don't want to do is hold up the motorway.

"It's a matter of sitting down with Transit New Zealand and working out the problem."

He disputes comments from some locals that the taniwha causes road accidents on the stretch - the roadside nearby has many white crosses.

The more likely cause is fog and dangerous driving, he says.