Mana Party leader Hone Harawira says the question of who owns water has the potential to be bigger than the Foreshore and Seabed debate.
Prime Minister John Key says the Government could choose to ignore the outcome of the Waitangi Tribunal's hearing on water rights because rulings are not binding.
On Monday, the tribunal began an urgent hearing into water ownership as the Government prepares to sell shares in some state assets, including four power companies that have hydro schemes.
The Mixed Ownership Model Bill passed in Parliament by 61 votes to 60 on 26 June this year. The legislation opens the door for the sale of up to 49% of shares in Genesis Energy, Meridian Energy, Mighty River Power and Solid Energy.
The Maori Council on behalf of claimants is seeking recognition of water rights and a recommendation to freeze the Crown's sale of some shares in the companies.
Hone Harawira told Radio New Zealand's Morning Report programme on Wednesday that if the Maori Council takes the issue to the High Court and beyond, and the Government presses on with legislation to defeat the case, it could cost National the next election.
Mr Harawira says it is clear from petitions organised by Mana, the Greens, Labour and New Zealand First that opposition to partial asset sales is widespread.
He says the Maori Party needs to decide where it stands on Maori ownership rights to water, and it can't call the Government a thief while continuing to live off the proceeds of the crime.
Maori Council lawyer Donna Hall told Morning Report the Crown agreed in the 1890s that the ownership of water rests with Maori and New Zealand has to face up to this.
Ms Hall says Prime Minister John Key is correct in his interpretation that the Government does not have to take up the recommendations of the Waitangi Tribunal.
However, she says the tribunal is an important part of race relations in New Zealand, and the danger is that Maori may start ignoring Mr Key.
An expert witness appearing before the Waitangi Tribunal says the Crown needs to be ''crystal clear'' to buyers about who owns the water, before parts of hydro power companies are sold.
Australian energy executive and businessman Philip Galloway told the tribunal on Tuesday that professional investors would look straight at who controls the water that runs through the turbines.
With Maori actively seeking rights to water, Mr Galloway says buyers would be wary.