One of Queensland's longest-running land disputes has been resolved, with more than 118,000 hectares of land handed back to traditional owners at Cape York.

Key points: New national park will be co-managed by the Government and Wuthathi people

New national park will be co-managed by the Government and Wuthathi people The land is home to several threatened species, including the palm cockatoo

The land is home to several threatened species, including the palm cockatoo Former prime minister Bob Hawke rejected a sand mine at Shelburne Bay in 1987

Treasurer Curtis Pitt visited Lockhart River in the state's far north today to officially hand over the area, known as Shelburne Bay, to the Wuthathi people.

It is known for its brilliant white silica sand dunes, which are hundreds of metres high, and is also home to several threatened species including the palm cockatoo.

Traditional owner Phil Wallis said his people had been fighting to take back their homeland for 20 years.

"It's like a magical place. When you go to somewhere that is unspoilt, it's like no-one has touched it," he said.

"Today's a very historical day for us, it took nearly 20 years to do.

"It's the start of redeveloping our country, and looking after country and managing country and looking at other ventures.

"Because this country is very unspoilt, very untouched, there's a lot of sacred sites out there, a lot of story places the younger generation need to learn and carry on those practices, whether it be gathering food, medicine, teaching those kids about the story places and why they are important to us."

Tradtional owners said Shelburne Bay was a "magical place" that housed many sacred sites. ( Supplied: Kerry Trapnell )

Mr Pitt said 40,000 hectares of the land will become a national park, to be jointly managed by the state and traditional owners.

"This is a defining moment in Queensland's history, culture and conservation — there are few other places like this in Australia," he said.

The Australian Conservation Foundation said it first proposed the area become a national park in 1976, and is pleased with outcome.

In 1987, prime minister Bob Hawke rejected a proposal to develop a silica sand mining project in the area, saying it would be "contrary to the national interest" because of its impact on the environment and "adverse effect on the Aboriginal community".

"Sand mining at Shelburne Bay would have damaged the wilderness value of the area and would have involved some damage to the Great Barrier Reef," Mr Hawke said in a media release.

"In our nearly 200 years of European settlement Australian governments too often have paid scant regard to the environment."