Simon Bridges says the Government needs to "immediately rule out" negotiating with iwi over disputed Ihumātao land in Auckland.
His comments today come after the Kīngitanga movement, led by King Tuuheitia and backed by the powerful Tainui iwi, says resolution of the long running Ihumātao occupation lies with the Government.
Mr Bridges, the National Party leader said if the Crown buys the land it will set “an unfortunate precedent” that will cost New Zealanders.
"I think the Government needs to immediately rule out negotiating as iwi has asked for with Fletchers over Ihumatao," Mr Bridges told 1 NEWS Political Editor Jessica Mutch McKay.
"I think if they don't do that they are calling into jeopardy the full and final treaty settlement process and other iwi will be lining up to get the same sort of treatment in relation to private land around New Zealand.
"It is absolutely wrong to open it back up, to open private lands up and set unfortunate precedent that will costs New Zealanders a lot of money."
Mr Bridges was asked if he disagreed with the view that Ihumātao sits outside the Treaty process.
"No I don't, indeed I have talked to iwi leaders who have made it quite clear to me that if they see this opened up, if they see Crown money changing hands here they will come calling, because it does call into question full and final Treaty settlements that they have done."
Mr Bridges thinks his party will be on the right side of history over the issue.
"I am absolutely confident that we are on the right side of history here, we have had a strong Treaty settlement process and National has been strong in that area."
He went on to say the Prime Minister "stuck her oar in and shouldn't have done that" and "it will be highly regrettable" if the Government pays Fletchers for the land to gift back to iwi and they should "rule it out straight away".
King Tuuheitia is urging the Government to negotiate with the current owners, Fletcher Building, for the return of Ihumātao to who he says is its rightful owners, mana whenua.
"It is important that the Government prevents any further alienation of the people from their land, while discussions are underway," Kīngitanga spokesman Rahui Papa says.
The occupation of the land earmarked for housing development began nearly two months ago.
Prime Minister Jacinda Ardern negotiated for Fletcher to stop work whilst competing iwi groups talked.
Deputy Prime Minister Winston Peters issued the following statement on the land issue: “We thank Kingi Tūheitia for his work on this.
"The intention of the Prime Minister in seeking for the work on the land to stop was for the Kingitanga to play a facilitative role,” Mr Peters said.
“We are pleased that mana whenua are working constructively together towards a solution.
“We have always said that we are happy to join the discussions on the future of the land at Ihumātao.
“As we go through the process we are mindful of heritage claims, precedent issues and the commercial interests in the site.
“We look forward to discussions that involve all parties to find a resolution to these matters,” he said.
The Green Party also issued a statement, "welcoming today’s decision by the mana whenua of Ihumātao to seek return of the land from the Crown."