Mana party leader Hone Harawira is describing the High Court ruling against the Maori Council over water rights as a "set back", but said there is a long way to go yet.
Justice Roland Young ruled in favour of the Crown's move for a partial sale of some state assets, saying there was no reason to delay the sale of Mighty River Power.
"This is a setback but the New Zealand Maori Council still holds the option of taking the case to the Court of Appeal and if necessary to the Supreme Court," Harawira said.
"And thanks to the Council's case, the petition has nearly reached the numbers necessary to call for a referendum on asset sales and I am confident that that will happen before government's March 2013 timeline for the sale of Mighty River Power".
The Maori Council had claimed the sale of the hydro-electric power company would disadvantage Maori and their ability to claim water rights in the future.
Maori Council Deputy Chairwoman Rahui Katene said it is likely the ruling will be appealed.
"We're sitting around at the moment talking about what our next steps are, whether we're going to appeal. Realistically I think that's our only option, it's too important not to," she said.
However, ONE News Political Editor Corin Dann said Justice Young's ruling "well and truly scotched" the Maori Council's arguments, adding it was a "pretty crushing victory for the Crown".
Dann said the council is "heartbroken" by the ruling, saying it was "a very strong judgement against them".
"I think it's going to be a very tough road for the Maori Council now, the court battle is a very costly process," Dann said.
"The question now perhaps is whether they can somehow skip the Appeal Court, and go straight to the Supreme Court where a final judgement will be made."
In a lengthy judgement decision Justice Young said the Crown did not act against the Treaty of Waitangi in its decision to put Mighty River Power up for sale.
Young said he was "satisfied" it "will not act inconsistently with the principles of the Treaty".
"I am satisfied that there is no nexus or connection between the sale of the shares in MRP and the need to provide for Maori claims to proprietary interest in water by way of potential redress or recognition of rights," he said.
He also said the consultation process which took place in relation to the Treaty protection was "adequate", and that the Crown "had not predetermined its stance, especially with respect to the Waitangi Tribunal's "shares-plus' concept".
The Maori Council had accused the Government of not consulting properly with Maori, and of having already made up its mind about its decision when it did meet with them.
The asset sales issue sparked controversy after it was announced earlier this year, prompting a debate about water rights, with Prime Minister John Key asserting that "no-one owns water".
Young also said he did not believe the Crown was obliged to allow the Waitangi Tribunal process to be finished before it began the assets sale programme.
In addition, he said he "rejected" the claim that the sale was unlawful, and said he was "satisfied that there was no breach of natural justice in the process".