Mr Key said the Government's current view was that it opposed such a mechanism.
"It is not in the national interest for any group with Mighty River Power's potential 49 per cent minority shareholding to be given such rights'', he said.
He also said almost every form of redress that could be provided through "shares plus" could be achieved in other ways.
The Government's advice was that other elements of the plan such as Maori ability to make management or strategic decisions would not work in practice.
The plan was also likely to make shares in the companies less attractive to investors and therefore reduce the amount of money the Government would raise through the asset sales programme.
Nevertheless the Government had decided that taking time to talk about 'shares plus' with relevant iwi was the "the prudent thing to do''.
"That means preparation fro the Mighty River Power share offer will continue to proceed, but in the March to June window next year, rather than in 2012.''
However, Mr Key said the Government did not believe it was necessary to have a national hui on the issue of Maori proprietary rights over water as also recommended by the tribunal.
Mr Key acknowledged that decision ran the risk of prompted a legal challenge to its Mighty River sale plan from the Maori Council, "but ministers consider that the Crown woud be in a very strong position should legal action go ahead''.
"If it was to occur, the Government expected it to happen sooner rather than later'', Mr Key said.
Mr Key said consultation with iwi affected by the Mighty River sale would take place over a five week period and the Government planned to hold similar consultation with iwi affected by the Genesis and Meridian floats later.
Mr Key said while his Government did not believe "shares plus" was workable it would listen to the views of Maori to make sure it was not overlooking anything, but "we kicked those tires extremely hard over the last few days'', he told reporters this afternoon.
The decision to delay the sale would cost the government somewhere between $5 million and $10 million but Mr Key said that was money well spent as the resulting clarity and certainty for potential investors would maximise the returns from the sale programme.
The Maori Council said the Government's decision vindicated its case to the Waitangi Tribunal.
"This is not just a great result for New Zealand Maori Council or Maoridom generally, in the Council's view it is a great result for New Zealand as it is New Zealand as a community that has to solve these problems in the New Zealand way'', the council said in a statement.
"The Tribunal under great pressure produced a clear and cogent decision which benefited all parties.''
The council said the Maori Party was "to be commended for its constructive role in influencing this result with the Government''.
Maori Party recommended delay
Earlier, the Maori Party recommended the Government delay the Mighty River sale or begin urgent talks with relevant iwi in a letter it sent to the Government last week which outlined what it saw as the way forward on the Maori water rights issue.
Maori Party co-leader Pita Sharples issued the letter this afternoon just before Key's announcement.
Dr Sharples said the Maori Party had worked hard over the last week to find a way forward over the water rights issue and had sought "specific commitments from the Government on ways to improve and speed up this process."
Dr Sharples said the Maori Party had encouraged the Government to give "serious consideration" to the Waitangi Tribunal's recent interim report recommending the Mighty River sale be delayed.
The party had also encouraged the Government to talk with with iwi who had interests in natural resources used by Mighty River Power, and with smaller claimant iwi over their ancestral water bodies.
To progress those negotiations, the Maori Party had asked the Government to commit to developing a national policy framework to support iwi and hapu in their respective negotiations with the Crown over their own natural resources.
It had also asked the Government to convene hui for iwi leaders, the NZ Maori Council and other claimant parties, "to clarify common ground on these issues".
However in the letter sent to Mr Key last week, the Maori Party asks the Government to either "temporarily delay" the sale of Mighty River or commence negotiations "in some urgency to reach urgent agreement with those iwi with rights and interests within the Mighty River Power estate".
While the Maori Party has been under some pressure over its support for Mr Key's Government during the water rights debate, Dr Sharples this afternoon said "the huge majority of Maori leaders insist that we must stay in Government to see these vital issues through".
