A shark cage dive company has rejected claims the practice can make sharks more aggressive.
Tourists who want to experience a great white shark up close can go to Stewart Island, where bait is used to attract the animals.
But recreational fishers and divers who operate along the Southland coastline said there was an increase in shark sightings over the past few years, and they had become bolder.
More than 130 Stewart Island residents have signed a letter to the Minister of Conservation demanding shark cage diving be stopped.
Stewart Island News editor Jessica Kany, who was behind the letter, said shark behaviour has changed.
"Over the years since they've started the sharks have been behaving unusually aggressively toward people in boats. They seem to be drawn to boats. There are lots of stories circulating about sharks biting boats, following boats."
But Mike Haines, who set up Shark Experience six years ago, said sharks were following boats and approaching divers long before his industry came along.
"I run a commercial training school out there for years, and we've had divers approached, including myself, I had a couple great whites come up to me as well, they've harassed divers and they were doing those things long before the shark cage diving industry came along."
Earlier this year it was announced operators would need to secure permits.
The Department of Conservation said a decision on the permits will be made in the coming week.