The Parihaka settlement in Taranaki is to receive a $5.8 million grant from the Regional Infrastructure Fund to allow it install a modern wastewater system.
The $7.3m project will be co-funded by the Parihaka Papakāinga Trust, which is contributing $1.5m.
The Parihaka papakāinga, a village on ancestral Māori land, is located on the rural coast of Taranaki and is home to three marae and about 30 dwellings.
It was a centre of passive resistance to illegal land confiscation and forced sales of Māori land in the 1800s and sacked by Crown troops and militia in 1881.
Regional Development Minister Shane Jones said it would have a multitude of benefits for a hugely significant cultural site, including keeping local waterways clean and enabling new housing.
A modern wastewater system would be installed at Parihaka to collect, treat and disperse waste water from existing and future dwellings.
Septic tanks at the end of their life would be removed and the land remediated, freeing it up for future papakāinga housing - up to another 100 homes.
The new system would also reduce the risk of contamination of waterways during floods.
Jones said the project qualified under the Regional Infrastructure Fund because the rural water assets were community-owned and not on the local authority's water network.
"Due to its Māori land classification, the site is non-rated and therefore doesn't receive infrastructure investment and services provided elsewhere by local government. This coalition government is focused on accelerating infrastructure projects, particularly in communities that cannot access funding through other means."
The work would start immediately as part of the Parihaka Papakāinga Trust's infrastructure upgrade programme already underway.
The programme aimed to provide a secure supply of drinking water, stormwater infrastructure, lighting, roading, firefighting capacity and other important infrastructure.
The wider infrastructure work programme was funded by the trust through a combination of its own development money and additional fundraising from the Toi and Tindall Foundations, and an earlier $14m Provincial Growth Fund grant.
"While an ambitious visitors' centre was originally planned for the grant funding, escalating costs and the urgent need to install basic infrastructure at Parihaka took precedence," Jones said.
Māori Development Minister Tama Potaka said investing in Parihaka with the trust protected ancestral Māori land that was significant to all New Zealanders.
"Parihaka was established by the prophets Tohu Kākahi and Te Whiti o Rongomai as a place of peace and shelter during the New Zealand Land Wars.
"Led by Tohu Kākahi and Te Whiti-o-Rongomai, the people used peaceful opposition to challenge the validity of land thefts and forced sales by the settler government, as well as to a violent occupation by Crown troops in 1881.
"Parihaka has become known for its residents' actions of passive resistance to land theft by the Crown, and their peaceful response.
"The Parihaka community continue to follow the peaceful teachings of Tohu Kākahi and Te Whiti o Rongomai and there is a collective effort to ensure an enduring resilience - spiritual, physical, cultural and economic - for the community," Potaka said.
"The Crown's Accord with Parihaka states our commitment to supporting the trust's development plan."
The Parihaka project also utilised Taranaki's new Māori trade consortium Ngā Waka Whiria, which aimed to give smaller businesses the opportunity to participate in large construction contracts.
The Parihaka project was the first opportunity to work with this new consortium.