Four Maori Party MPs voted against the Government's welfare changes in Parliament on Tuesday, amid claims they were not properly consulted.
Only the party's co-leader and Associate Social Development Minister, Tariana Turia, voted for the legislation.
But the Social Assistance Bill passed its first reading with support from ACT and United Future.
The party's chief whip, Te Ururoa Flavell, says the party does not like the approach to beneficiaries set out in the legislation.
"We think philosophically that we need to take a more positive line. The Community Max programme, for example, was a positive initiative that was about moving people on to jobs, and to employment and further training.
"It's been successful from our feedback from a number of communities, and we would have thought it far better to take the positive line rather than the punitive line."
Mr Flavell says the party is fearful the tougher approach to beneficiaries will have a negative impact on 50,000 children.
The four MPs met on Tuesday, ahead of the legislation's first reading, to decide their stance.
As Associate Social Development Minister, party co-leader Tariana Turia said she would vote for the legislation, although she too had misgivings about it.
Also at odds on consultation
The Government and the Maori Party disagree about whether the support party was properly consulted over the welfare changes, which were announced last week.
Mrs Turia is concerned the Maori Party was not given the opportunity to have its say on the welfare package.
"At the last minute we were given a copy of the reforms - that makes it really difficult to have input into them."
But Prime Minister John Key rejected Mrs Turia's claim. "There was complete and full consultation by the minister with all relevant ministers, and that included the Maori Party. The consultation started as late as December last year."
Social Development Minister Paula Bennett also confirmed that consultation was held.
Mrs Turia says she supports the package as a whole, but questions the wisdom of pressing ahead with welfare reforms at a time of high unemployment.
The reforms include imposing work obligations on parents receiving the Domestic Purposes Benefit when their youngest child turns six.
Mrs Turia is also critical of that, saying single parents are less likely to be hired in the current market.