An independent review recommending the repeal of the Foreshore and Seabed Act could see Maori customary property rights recognised and opens up the prospect of compensation.
However, the Government says public access to areas, including beaches, will be protected.
The review was agreed to by the Government as part of a post-election arrangement with the Maori Party.
A three-member panel headed by former Waitangi Tribunal chairman Edie Durie held hui throughout New Zealand from April this year to discuss the current law. The review attracted about 600 submissions, with 85% saying the act should be repealed.
The review says the Foreshore and Seabed Act discriminates against Maori and is wrong in principle and approach. It recommends the act be scrapped and transitional rules put in place while a long-term solution is developed.
The review outlines a range of options, including a nationally negotiated settlement over the foreshore and seabed, as well as regional negotiations or letting the courts settle questions of customary title.
The panel proposes that customary rights represent property rights and that "reasonable" public access should be defined. It says public access rights and customary rights of entitled hapu and iwi must be balanced.
The report was handed to Attorney-General Chris Finlayson on Tuesday. He says the review will be considered by the Government, but public access to the foreshore and seabed is safe.
Prime Minister John Key says public access to these areas is a bottom line and he is not expecting a public backlash if the law is dropped.
Labour Party leader Phil Goff says if the act is repealed, it should be replaced with something that creates certainty. He says free public access to beaches must be retained.
Mr Finlayson says compensation is an option if there is a national settlement on claims but will not pre-empt a response from the Government, which is due at the end of August.
The Foreshore and Seabed Act 2004 and the Resource Management (Foreshore and Seabed) Amendment Act 2004 received royal assent on 24 November 2004. Certain provisions of the act came into force on 25 November 2004. The remaining provisions came into force on 17 January 2005.
Recognising customary title vital - Maori Party
The Maori Party says repeal of the Foreshore and Seabed Act is fundamental and recognising customary title is vital.
Co-leader Pita Sharples says when the party entered Parliament people said it had no chance of getting the law repealed.
He says it is important to take note of the very strong language used in the report which says Maori were severely discriminated against.
Dr Sharples says public access was never an issue for Maori, but it will need to be addressed alongside the customary rights of Maori.