Confusion remains over whether Government is legally obliged to offer central Auckland iwi right of first refusal over a piece of land intended for housing.
A leaked letter shows one of the Government's four pieces of land intended for housing in Auckland was already in the process of being offered to iwi under a Treaty settlement process.
The Government has been insisting it has no obligation to give the right of first refusal to iwi to purchase the surplus Crown land, and is now facing a court challenge from Ngati Whatua and Tainui.
The letter obtained by Radio New Zealand News was written by agents for the Ministry of Education to the commercial arm of the Auckland iwi collective advising them that disposal of the surplus land in Massey had begun.
The agents told the iwi company last December that, if the land was no longer required under the Public Works Act, the next step would be to offer it to the collective.
The land was later unveiled with three other sites which the Government said would be offered to private sector developers to speed up home construction.
But Building and Housing Minister Nick Smith said the letter served only as a preliminary notification to iwi.
"Ngati Whatua has no right of first refusal on that site," said Dr Smith.
"The obligation is with the limited partnership from the Tamakai Collective and the Government has consistently communicated correctly with that Tamakai Collective."
Prime Minister John Key said the Government had obligations under its agreement with the broader Tamaki Collective but it did not apply to the Massey land.
"They do have first right of refusal, but that doesn't mean that particular piece of land, the advice is incorrect. Actually we acquired it after their settlement."
Labour leader Andrew Little said the whole programme had become a debacle and Dr Smith should be stripped of his portfolio
"Having two weeks ago shown journalists pots of land where he said that houses would be built, and John Key having stood up at a press conference and said, there is no issue about first right of refusal by Ngati Whatua and Waikato-Tainui, and now it turns out that the land isn't available for house building on and there is an issue about first rights of refusal," he said.
"Nick Smith has blundered his way through and I think it's time for John Key to relieve him of that portfolio."
The minister was unconcerned by that criticism. "He hasn't built too many houses," said Dr Smith. "I think this programme is a very positive one. I think its an opportunity to build houses and any questions of the programme should be delivered on results."
Meanwhile, Dr Smith said the piece of land in question already has Cabinet approval to be used for housing.