Waikato-Tainui says it will appeal against a decision that doubles the volume of water allowed to be taken from the Waikato River.
A board of inquiry last month granted Watercare resource consent to withdraw 150 million more litres a day for the Auckland supply.
Watercare is now allowed to take 300 million litres of water a day from the Waikato River year round, with an operational consent for the next 20 years.
Waikato-Tainui chairperson Linda Te Aho said the board of inquiry's ruling offered some concessions, but the iwi was still concerned it undermined the river and those who live along it.
"We remain concerned with the undermining effect on te mana o te awa and the mana whakahaere of Waikato-Tainui and our hapū and marae along the river," she said in a statement.
"We will advise Watercare and the relevant local/regional government representatives of our decision as a matter of courtesy however our primary responsibility is to represent the interests of our awa and people."
Te Aho said Waikato-Tainui, which had a statutory interest in the governance of the awa, recognised it was a finely balanced decision.
"It is absolutely clear to us is that our tupuna river should not be used to fix decades of failed infrastructure investment," she said.
In the application for the appeal, seen by RNZ, Waikato-Tainui argued that the board of inquiry erred in law in some aspects of its decision.
It also said Watercare, in its processes and application, failed to recognise and provide for meaningful relationships with tangata whenua.