The Hawke's Bay Regional Council has requested its investment company HBRIC place a moratorium on the Ruataniwha Dam until a review of the scheme is complete.
The moratorium is subject to consultation between the council and HBRIC, to be completed by 14 December.
If the moratorium was put in place, HBRIC would stop any further expenditure on the dam and not take any further steps to acquire protected Department of Conservation (DOC) land for the dam.
Councillor Peter Beaven said the request shouldn't cause any problems because HBRIC had already indicated it had put spending on hold.
Councillors voted 6-3 in favour of seeking a moratorium.
Meanwhile, Forest & Bird has questioned the credibility of an independent council review of the dam.
Councillors today discussed the terms of reference for a review of the $900 million irrigation scheme.
During discussions, the law firm Sainsbury, Logan and Williams advised on whether HBRIC could have the Court of Appeal's decision on a key land swap overturned.
Lawyer Lara Blomfield told councillors the Supreme Court was likely to grant leave for an appeal, but the outcome was finely balanced.
Forest & Bird said it was shocked the advice was provided by the same law firm that was acting for the council's investment company in the land swap.
The conservation group said the law firm could hardly advise otherwise, given its legal duty to the dam company.