The Prime Minister, Helen Clark, says the result of a referendum on self determination in Tokelau will need to go before the New Zealand Parliament for consideration.
The Cabinet has now begun considering a draft treaty on the proposed relationship if Tokelau chooses limited independence in the referendum.
Tokelau is to hold the vote over three days in mid February when it will decide whether to choose self government in free association with New Zealand.
But the Prime Minister says Cabinet needs to sign off on the draft treaty before the vote, the result of which will be referred back to Parliament.
"Should the people of Tokelau adopt the course of action that their leaders are putting to them then the matter will need to come to our Parliament, both with respect to the treaty which goes through the normal treaty examination process, and there will need to be a Tokelau bill as well."