Ngapuhi is closing in on a deal with the Crown but a significant hurdle remains as the iwi has yet to fully agree on which body should handle the settlement.
"My challenge to all Ngapuhi today is this: put aside your differences," Mr Key said following this morning's dawn service at Waitangi.
"The Crown is ready and willing to negotiate with whoever you choose as your representatives."
Mr Key said he was keen to see a deal struck this year.
"If that can be done I am prepared to look at some form of payment on account to incentivise people to act in a positive and progressive manner."
Speaking to reporters after Mr Key speech, Mr Tau, the chairman of Te Runanga a Iwi o Ngapuhi said the offer wasn't solicited but it was welcome.
" Everybody knows that iwi when they go along the settlement route they have to pay for their things themselves. It's cost us $3.5 million to get where we are today. We've had no assistance and But Mr Tau said the payment was unlikely to speed up Ngapuhi's settlement process.
"The incentive for us is the drive to get our iwi grievances behind us and build an economic base for Ngapuhi."
Responding to the figures offered by Mr Tau, Mr Key said: "You've got to dream big but it doesn't mean we'll be writing a cheque for that amount".
Nevertheless, "it's going to be a big deal," he said.
Treaty Negotiations Minister Chris Finlayson made the point the Crown had not yet recognised a properly mandated Ngapuhi entity to conduct formal negotiations with.
The Government expects to make a decision on whether to recognise the runanga's Tuhoronuku mandate within weeks.
However opposition to Mr Tau's group negotiating of behalf of all Ngapuhi's hapu was clearly evident in the form of protests at Te Tii Marae yesterday.
"It's the size of that protest that matters", Mr Tau said, "and we think that is insignificant."
But Crown recognition of the Tuhoronuku mandate is likely to trigger a Waitangi Tribunal claim by rival groups while the runanga is likely to also launch a claim of its own if it does receive recognition which could derail Mr Key's wish for swift progress.
