The government is being urged to set up a new national body to oversee freshwater management and stop any further degradation.
The recommendations are made in a report from the Land and Water Forum, commissioned by the government last year, which was tasked with finding a way to "hold the line" and prevent degradation by managing sediment and nitrogen discharges into water.
One of its key proposals is setting up a land and water commission to oversee changes and a national framework.
"Local authorities and courts have been left to interpret and implement the emerging framework without any effective oversight, which has resulted in slowed and inconsistent implementation," Land and Water Forum chair Dr Hugh Logan said.
Loopholes in the Resource Management Act and National Policy Statement, that made it possible for the continued decline of freshwater management, should be closed and stronger measures need to be taken to protect wetlands and outstanding waterbodies, Dr Logan said.
Outstanding issues of iwi rights need to be resolved because of the uncertainties it creates, the report outlines.
It proposes allocating nitrogen limits on water bodies, though acknowledged there were differing views on how this should be approached.
"In the long term, iwi rights and interests should be addressed and the tools and system adapted to ensure land is used according to its ability to absorb any nutrient discharges coupled with the sensitivity of discharge in associated waterbodies," Dr Logan said.
The Land and Water Forum brings together over 50 stakeholders consisting of industry groups, electricity generators, environmental and recreational NGOs, iwi, scientists, and other organisations with a stake in freshwater and land management.
Environment Minister David Parker said iwi rights would be addressed but it was too early to say how this would be done.
"It's a difficult issue but we will be addressing it," he said.
"We want better outcomes for the management of water ... the first and foremost interest of Māori is in clean rivers, lakes and aquifers."
Asked if this included giving iwi ownership of water or rights to it, Mr Parker said: "I'm not going there today".
Some, but not all, of the Land and Water Forum's recommendations to halt the decline of water quality would be adopted, he said.
This included immediately prioritising action in the most at-risk catchments, as suggested by the Forum.
Other key recommendations, including nitrogen limits on all catchments, closing loop holes in the Resource Management Act, and setting up a national body to oversee freshwater management, would be considered, Mr Parker said.
While he agreed nutrient limits on catchments were needed, more work was required to decide how this should be done.
"The issue that isn't resolved that we tasked them with is how you allocate nutrient discharge rights in catchments where there is too much nutrient pollution of the waterways already.
"So it really falls to us now to pick up the baton on that," Mr Parker said.
Suggested changes to the RMA would be considered but were not likely to be introduced to Parliament this year, Mr Parker said.