Housing minister Nick Smith's interpretation on right of first refusal law in treaty settlements has disappointment Waikato iwi, who want an explanation.

The latest move, which came just days after Waikato-Tainui commemorated their historic treaty agreement with the Crown over the land confiscations of the 1800s, has put the relationship on shaky ground.

Smith's proposal to skirt around the right of first refusal (RFR) mechanism in Treaty of Waitangi settlements to sell 500 hectares of Auckland land for development was at odds with settlements, said Waikato Tainui executive chairman Rahui Papa.

"The intention to circumvent the RFR mechanism undermines the intention and integrity of the Waikato Raupatu Claims Settlement Act 1995 and damages the Crown relationship with Waikato-Tainui," said Papa.

Smith said Crown land to be freed up for sale would be transferred within the Crown and sold under the Housing Act but iwi including Auckland's Ngati Whatua and South Island's Ngai Tahu have spoken out against the move.

Waikato-Tainui tribal boundaries extend to Manukau Harbour and beyond and Papa said they held strong interests in Auckland.

Papa said Waikato-Tainui had written to Smith and asked for an explanation.

He wants the minister to "affirm the RFR process will apply for Crown land being developed and sold in Auckland".

He sought clarification of the minister's intentions before the tribe would consider any further action it would take.

"The RFR process was established as a way in which Waikato-Tainui could buy back land that had been confiscated," said Papa.

"In total, 1.2 million acres was taken and a paltry 2 per cent returned. Clearly the RFR mechanism is an important and fundamental element of the settlement."

Waikato-Tainui settled its treaty claim in good faith and had honoured its end of the bargain.

He said the tribe expected the Government to do the same.