The man selling the letter, John Hastilow, bought it from a grandson of Major Colvile in England in the 1970s.
Mr Hastilow, who lives in Christchurch, said he had gone to an auction with the intention of buying Major Colvile's medals, but had been outbid.
In consolation, Major Colvile's grandson offered to sell him his grandfather's letter.
Mr Hastilow said Major Colvile was a famous soldier who fought in the Indian mutiny and in the Maori wars.
"He was what was called a field officer of the 43rd Regiment and fought at Gate Pa, where they were defeated. He led the campaign at Te Ranga. They weren't going to be defeated a second time and really got stuck into the Maori warriors that day.
"The letter describes the battle and how the Maori dug trenches and what happened afterwards when they buried all the dead Maori in the trenches they had dug."
Mr Hastilow said he came to the Bay of Plenty Times with his story because he hoped someone in the Western Bay would buy the letter to keep it in the city.
His sister lives in Bethlehem and, while visiting her, he had attended last year's commemoration service for the 150th anniversary since the Battle of Te Ranga.
He said he had to sell the letter because he had recently suffered a health scare and needed to have a clean-out of the things he had collected.
"I hope it will stay local, that's why I wanted it auctioned locally. I'd rather see it stay here than ending up in a museum in England."
Pukehinahina Charitable Trust project director Buddy Mikaere, who was involved in last year's Battle of Te Ranga commemorations, thought the letter would be a fantastic acquisition for the city.
He said an obvious place for it to be displayed would be the soon-to-be built Greerton Library.
He hoped a local business might decide to buy the letter as a legacy item.