The government's plan to introduce a royalty on bottled water exports has hit a snag.

A senior official has told MPs it would breach international trade agreements, NZME reports.

"We are not in a position to apply an export tax on water as a consequence of some of our existing free trade agreements," Vangelis Vitalis told a select committee hearing on Thursday.

Mr Vitalis, deputy secretary for trade at MFAT, said a royalty would run up against the free trade agreement with China and the recently-negotiated Comprehensive and Progressive Trans-Pacific Partnership (CPTPP).

"The new agreement (the CPTPP) contains the same prohibition of export taxes," he said.

The coalition agreement between Labour and NZ First commits the government to introducing a royalty on bottled water exports.

Opposition leader Bill English says it looks like the government will be forced into a u-turn.

"While the idea has merit - the previous government took the responsible step of seeking recommendations on the matter - the new government has committed to it without even seeking advice from its legal and trade experts," he said.

In parliament, Deputy Prime Minister Winston Peters said the government was working on the issue.

"The government's position is that there are many alternatives to arrive at the kind of result that a royalty would impose upon any taker of water," he said.

"One could assume that, like every other sovereign nation and every other country that sets its own royalties, we are working precisely on that as we speak."