The Centre for Political Research says the move to place water usage rights with local government hands the ownership of water over to iwi.
The group has placed an emotive ad in major newspapers opposing the move.
Spokesman Don Brash, says there's clear evidence the Government's been in discussions with The Fresh Water Iwi Leaders Group, and he says if the plan goes ahead, it'll be a breach of the Treaty of Waitangi.
He says the Treaty doesn't give any racial priority to any group and this move would depart from that.
LISTEN TO LEIGHTON SMITH'S FULL INTERVIEW WITH DON BRASH ABOVE