The Marine and Coastal Area legislation has been passed into law after a fiery third and final debate.
The legislation repeals the Foreshore and Seabed Act 2004 and restores the right of Maori to seek customary title in the courts.
The bill had its third and final reading in Parliament on Thursday and passed by 63 votes to 56. It was supported by the National Party, the Maori Party and United Future.
The debate drew fiery claims that the bill was racist and the Maori Party had betrayed its people to support the National Government.
The Labour Party said the new legislation betrayed Maori rights and would result in a long and expensive road to the courts.
The Green Party agreed the bill is a betrayal of Maori, saying the Maori Party is obsessed with power at any cost and that it is now compromised.
The National Party said the bill was a way forward and the alternative would be an ongoing sense of injustice.
Maori Party co-leader Tariana Turia, who left the Labour Party over the foreshore and seabed legislation, celebrated the repeal of that law and the restoration of the ability of Maori to seek customary property rights in court.
However, she said whanau, hapu and iwi must now pursue their rights in court and reiterated her party's position that there will be challenges under to the new law in coming years.
Independent MP Hone Harawira, who left the Maori Party over the bill, said it represented a confiscation of Maori rights and many Maori do not support it.
Prime Minister John Key has made it clear the issue will not be revisited under a National Government.
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ACT tries to delay bill
The ACT Party opposed the bill and had lodged 1000 questions to the Speaker's office, 98 of which were accepted.
During Question Time on Thursday, ACT put questions to members, many of whom were National MPs, in an attempt to hold the bill over until after next week's recess.
However, most of the MPs were absent, so the questions were postponed.