Rotorua Lakes Council's decision to adopt a modified version of the Te Arawa Partnership Proposal has been applauded by the Race Relations Commissioner and the mayor of New Plymouth, and has appeased the chairwoman of the Rotorua Pro-Democracy Society.
The council voted 8-5 to allow Te Arawa representatives with voting rights on to the council's two key committees on Tuesday.
Race Relations Commissioner Dame Susan Devoy commended the decision.
"Relationships are about working with one another through the good times as well as the tough times, the Te Arawa Partnership model formalises our relationship in Rotorua.
"I was lucky to grow up in Rotorua ... and I'm very proud of my childhood hometown today.
"We're not perfect, no town or community is, but today is about laying down a blueprint for our children and their children."
New Plymouth mayor Andrew Judd said the decision would affect local government all over the country.
"Firstly, I congratulate Steve [Chadwick] and her council, they have picked up the baton and lead the country.
"This question will now ripple through the country. Others will follow, the conversation is just beginning."
Mr Judd said previous attempts by his council to engage with iwi had fallen short.
His council had voted against the appointment of iwi representatives with voting rights to standing committees, and their decision to set up a Maori ward was overturned by a landslide after a district-wide binding referendum earlier this year.
Mr Judd said this left his council in a position where there was not enough engagement with iwi, and he was petitioning the United Nations to change legislation, because no other ward decision could be forced to a binding referendum.
"Other wards we decide to have, if there's an objection, there doesn't have to be a binding referendum."
Waipa mayor Jim Mylchreest said the district had non-elected Maori on standing committees with voting rights for about 15 years, which had worked well.
"There are a number of others [councils] around the country, it will be something that just becomes common place ... it's just a case of getting over it and looking forward."
Rotorua Pro-Democracy Society chairwoman and councillor Glenys Searancke said she was pleased with Tuesday's result.
"There was an adjustment ... I think it was very good.
"I wasn't surprised at the vote, we didn't think for one moment that the vote would change. We'll just wait and see. It could work."
She said the society had been misconstrued as being racist.
"I think that some of the debate was a bit vicious because this has never been a racism thing, it's the democratic process we stand for.
"It's the appointment that has always been our concern."
Mrs Searancke said the society was "taking a breath" and confirmed legal action could be on the cards.
"I think it's something that has concerned the community more than I've known before in all my time with council, so I don't think it's finished for one minute," she said.