The Northern Territory town of Katherine is at the heart of a bitter feud between two Aboriginal clan groups over which has a rightful native title claim to the area.

The Jawoyn Association said the Northern Land Council (NLC) should never have submitted a native title application on behalf of the Dagoman people in 1999.

"It's an insult to the Jawoyn people that the Dagoman have laid claim to it," said John 'Jak' Ah Kit, a former politician who is now a consultant for the Jawoyn Association.

He was also a former director of the NLC from 1984 until 1990.

He said recognition that Katherine belonged to the Jawoyn people was more important than any benefits that might flow from native title rights.

"If you claim other people's country, in the old days you get killed, simple as that," Mr Ah Kit said.

The Jawoyn Association will hold a meeting in Katherine next month to authorise a native title determination application.

The claim would cover the same parts of the town the Dagoman people applied for.

The Dagoman claim is registered with the National Native Title Tribunal, but 18 years on, a determination has still not been made.

'Immense dislike of a nature I've never seen before'

The NLC said it respected the rights of any Aboriginal people to bring claims under the Native Title Act.

"The original application was lodged following extensive consultation with all Aboriginal stakeholders in the Katherine region including Jawoyn people and the Jawoyn Association," the NLC said in a statement.

Mr Ah Kit said the issue had sparked deep animosity between Jawoyn and Dagoman people.

John 'Jak' Ah Kit says the Jawoyn people want the matter resolved so Katherine can be developed. ( ABC News: Mike Donnelly )

"What I've seen so far is ridicule of Jawoyn leaders; our elders disrespect that intensely," he said.

"We have a situation where people are saying that that's their country and not Jawoyn's country — people from the Dagoman.

"We have a situation where there is almost conflict amongst Dagoman and Jawoyn, and immense dislike of a nature I've never seen before."

The NLC said it was aware of divisions in the community.

"Unfortunately this is not an unusual situation in town claims where there is a long history of colonial settlement," it said.

"The NLC encourages all Aboriginal people in Katherine to try and work together and understand the different points of view some people have about traditional ownership in the town.

"The NLC will engage with [the Jawoyn Association's] legal representative with a view to trying to negotiate an agreed outcome with all stakeholders."

Expansion of town 'being prevented by dispute'

Complicating the matter is the fact the NLC's chief executive Joe Morrison has Dagoman heritage.

"The NLC's CEO has signed a declaration of conflict of interest and excused himself from any involvement in the native title claims in Katherine," the NLC said.

The Jawoyn Association said uncertainty over the issue was preventing the expansion of Katherine.

"The Jawoyn position is that we want that sorted out," Mr Ah Kit said.

"And we want to ensure that if we get to a situation to negotiate with the government of the day, that we want Katherine to expand.

"At the moment the native title claim is not allowing Katherine to develop further than the township boundaries as they already exist."