Attorney General Chris Finlayson says it has not been decided that the Foreshore and Seabed Act will be repealed, but people can expect major changes to be made.
A three-person panel has decided the 2004 Act breaches the Treaty of Waitangi and has recommended the legislation be repealed.
Mr Finlayson says he was happy with the make-up of the panel, which has been accused of bias. He told Morning Report it is too early to consider compensation, but that may be considered.
Mr Finlayson, who is also the Minister for Treaty Negotiations, said he will make detailed comments on the panel's decision in about seven weeks. Legislation will then be drafted.
He said it will be clear that public access to beaches is a non-debatable proposition.
The Maori Party says the Act must be repealed and Maori given the right to seek customary title.
A Radio New Zealand political reporter says exactly how that would happen, and what it means in practical terms, is far from clear.
But the review panel argues that customary title carries with it property rights, opening the prospect of compensation.
The Government will spend the next two months developing its response to the recommendations and repeal of the Act now seems inevitable.
Mr Finlayson says public access will be ensured. He says the review panel's emphasis on the importance of public access should reassure many who feared recongition of Maori rights could block them from the beaches.
The inquiry was set up in a post election deal between the National and Maori Parties. Two months of hearings were held in which 580 submissions were heard.
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 Foreshore and Seabed Act came into force on 25 November 2004, with the remaining provisions coming into force on 17 January 2005.
Anger at its passing created the Maori Party and led to Wednesday's finding.
The review panel's language was forthright: "The act should be repealed and the process of balancing Maori property rights in the foreshore and seabed with public rights and public expectations must be started again".
However, the Council of Outdoor Recreation Associations says the panel investigating the Act was not a proper cross section of society.
Dr Hugh Barr says the recommendations of the panel would put control of public assets in the hands of a few.
He says the panel was made up of a treaty academic, a former head of the Waitangi Tribunal and the daughter of Sir Tipene O'Regan - and not representative of New Zealand.