Bay of Plenty hapū Ngāti Tamateatutahi says it is over the moon that the mana of land on the shore of Lake Rotoiti will be returned to Māori.
Rotorua Lakes Council plans to start a process to 'stop' Tamatea Street as a public road, which would allow the hapū to put in a bid to have it returned.
The strip of council land on the eastern shore of Lake Rotoiti was confiscated by the Crown 118 years ago for the development of the Rotoiti Township.
The development never went ahead, and that section of land was later given to the council.
Rotorua Lakes mayor Steve Chadwick said the process allowed the hapū to go to the Māori Land Court for a 'roadway order', which effectively gives the land back to its original owners.
She said once that happened, an agreement would be made with iwi to make sure users had the same rights to the land, as if it was still a public road.
The council would continue to service the area, and it would make no difference to Tamatea Street property owners.
Ngāti Tamateatutahi hapū spokesperson Davey Gardiner said he thought the land was gone forever.
"We're over the moon," he said. "It's quite an important area for us. It's historical in nature. Our ancestor is buried there. One of our significant events with Ngāti Pikiao occurred down there. It's a nice piece of property."
Mr Gardiner said he thought it was lost in the treaty settlement discussions for the Te Arawa settlement. He attributed the return to the campaigning of hapū member Morris Meha.
"I thought it was lost but Morris was persistent in making inquiries on our behalf".
Mr Gardiner said it would still be business as usual for public users.
"It's the mana. It's the mana that's been returned to us that we are over the moon about."
He said the move showed a positive relationship developing with the council.