The public can no longer veto a council's decision to introduce Māori wards.
The Local Electoral (Māori Wards and Māori Constituencies) Amendment Bill passed its third and final reading at Parliament this evening.
MPs have been debating the remaining stages of the legislation under urgency since yesterday afternoon.
All stages of the legislation were rushed in order to give local bodies time to prepare ahead of the next election.
The law change means local polls with 5 or more percent can no longer overturn a councils' decision to introduce Māori wards.
It also means the deadline for councils to consider Māori wards has been extended to 21 May 2021, giving them more time to decide if they want to introduce them.
Nine councils have already decided to establish Māori wards in time for the 2022 local elections, joining three councils who have already done so.
The legislation had the support of Labour, Greens and Te Paati Māori, while the National Party and Act opposed.
During the third reading, Local Government Minister Mahuta said there had been a generational shift since the legislation was first introduced.
In 2002, the then-Labour government, of which Mahuta was a part, changed the law to allow councils to set up Māori wards, but it included the provision allowing the local poll to veto a council's decision to establish the wards.
Since then, 24 councils have tried to introduce the Māori wards, but only three have been successful.
Mahuta told the House she never would have supported the bill back in 2002, considering the public poll provision in hindsight.
Many local bodies believe it is time to "entertain the real opportunity for Māori being at the table and participating in decision making," Mahuta said.
"While one iwi might say 'we don't want Māori wards and constituencies, we have other arrangements' that should not deny other iwi or other Māori within a community from wanting Māori wards and constituencies. Do not play the divide and rule game," Mahuta said.
National Party local government spokesperson Chris Luxon told the House the entire process had been a sham.
Decisions about Māori wards should be left to local communities and people, not central government, he said.
"It's not for central government to get in the middle of the relationship between councils, iwi and hapū," Luxon told the House.
Māori wards was not the most pressing issue facing local government at the moment, he said.
"Local government is struggling on several fronts. The sector is overwhelmed and it's facing the most significant period of change, I think, in 30 years and there are much more strategic issues to address at this time that could make a big difference to the daily lives of our citizens," he said.
National is promising to overturn the Māori Wards bill if elected in 2023.
Leader of the Opposition Judith Collins said the legislation is shoddy law making and public submissions were mostly against the changes.