The Office of Hawaii affairs says land ownership claims will still need to be negotiated if a native Hawaiian bill is passed.
The US senator, Daniel Akaka, is hoping to table the Native Hawaiian Government Reorganisation bill 2005 for debate by the US senate this week.
The Deputy Administrator of the Office of Hawaii affairs, Ron Mun, says the bill would allow native Hawaiians a form of self rule such as that enjoyed by native Americans and native Alaskans.
But he says a new native Hawaiian entity would still need to negotiate with the state and federal government for any claims over land.
"The Akaka bill would preserve an option of a nation within a nation status. In other words, we want to keep as many options open to the native community. Obviously some will want to pursue independence, sovereignty, the royalty of the monarchy again, but we think this is, an at least, more practical option."
But many NGOs in Hawaii are opposed to the bill saying it is just another form of colonisation.