Prime Minister John Key yesterday raised for the first time the prospect of not repealing the Foreshore and Seabed Act if there is no agreement on what should replace it.
He voiced what he called a note of caution - "it is going to take realism on both sides" - but it is thought to have been aimed more at iwi leaders.
It suggests negotiations are about to get difficult.
Maori Party co-leader and Maori Affairs Minister Pita Sharples said he believed the policy was headed towards "a form of co-management".
But his Maori Party colleague Hone Harawira said Mr Key's words were "code" for not wanting to do anything meaningful.
Mr Key made his comment at Te Tii marae in Waitangi yesterday just before meeting the iwi leadership group (ILG) - a small group the Government consults on major Maori issues.
The group is assuming greater importance because the Maori Party is seeking the agreement of the ILG on some big issues, such as the emissions trading scheme and the foreshore and seabed, before it will consent to a compromise with National.
A formal review of the Foreshore and Seabed Act has been completed as promised in the confidence and supply agreement between National and the Maori Party.
Mr Key said last November a repeal of the Act was "likely".
Yesterday, he told reporters a solution was "potentially close".
"But we are at the point of all negotiations where we need to see if we can make progress.
"In the end, there's always the options I outlined [on the marae] which is the legislation stays on the books as it is, or there is a repeal and full access to the courts. But I think there is a better way through for the majority of circumstances."
Dr Sharples said Maori did not have a concept of ownership but wanted guardianship or kaitiakitanga.
"I think the way it is heading at the moment is a form of co-management and I think it is going to take a lot more work."
Asked if he would be happy with the Crown keeping ownership if there was a way of providing kaitiakitanga, he said "No, I wouldn't really be happy, but if the iwi sees that is a possibility, fine by me.
I think what they do prefer is a tipuna [ancestral] title.
It's like having mana over the foreshore and seabed."
Mr Harawira said he wanted Maori title to be recognised but with inalienable public access to address fears of Pakeha.
