The most expensive Treaty of Waitangi settlement in New Zealand's history, worth $500 million, was signed at parliament on Wednesday.

Around 800 Maori from across the central North Island crammed into parliament to watch the emotional handover, which has been 20 years in the making.

Negotiations have been described as tortuous and often fraught. They have also cost taxpayers around $30 million.

For some, the signing was the outcome of a 20 year dream.<;

"With the transfer of the majority of the forests held by the Crown in the region to the seven iwi, or tribes, represented in the collective, a nearly half-billion dollar asset base will finally be utilised in the interests of local Maori," Treaty Negotiations Minister Michael Cullen said.

The deal will see almost 180 000 hectares of prime central North Island forestry handed back to Maori, including Kaingaroa and Whakarewarewa forests, making the iwi collective the largest forestry land owner in the country.

The forests are mainly large-scale commercial plantations of pine operated by major forestry companies.

"By signing this settlement today we are also signalling our intention to be a positive and inextricable part of the New Zealand community," said Tumu Te Heu Heu of Ngati Tuwharetoa.

The land is worth around $200 million, add another two $223 million in accumulated forestry rentals and an unidentified amount for future carbon credits, it is potentially a half billion dollar package.

The assets will be divvied up between seven iwi, with more 100,000 members. They include Tuhoe, Tuwharetoa, Ngati Manawa, Ngati Whakaue, Ngati Whare, Raukawa and Te Arawa.

Ngati Rangitihi pulled out of the deal, unhappy with their allocation.

The deal, the largest single deal between the New Zealand government and Maori, settled claims that the Maori were victims of illegal land seizures and breaches of the Treaty of Waitangi.

The Treaty, signed in 1840, guaranteed the Maori the use of their land and resources in return for the British Crown taking control.

However, some Maori tribes waged armed resistance against colonial and settler incursions in the 1860-1870s, resulting in land confiscations and imprisonment.

Governments have also been accused of failing to abide by the Treaty, causing Maori to lose their land, use of resources, and language.

Since 1975 Maori have been able to lodge claims to reclaim lost land or gain redress for past grievances, which has seen several large land settlements.

Past settlements have seen tribes regain ownership of large areas of the South Island, including the country's highest mountain Mt Cook, and the central North Island, as well as formal apologies for wrongdoings.