"Water quality in our lowland streams and rivers is poor and the current system is demonstrably failing to deliver the outcomes the public wants," chairman Gary Taylor said.
Environment Minister Nick Smith said the Government planned to make "big progress" on the issue of water quality next year. The forum's report would provide "vital ingredients" for a planned discussion document on freshwater management.
The Government has already adopted some of the forum's previous recommendations, including a National Policy Statement for freshwater. It has also introduced a bottom line for water quality, though some forum members believed it was too weak.
One of the forum's main recommendations in the new report was exclude most livestock on lowlands and plains from rivers within a set timeframe.
"We have recommended a framework to exclude all cattle, deer and pigs from waterways on the plains and lowland hills," Mr Bisley said.
Dairy cattle and pigs would be excluded by 2017, and deer and beef cattle would be excluded by 2025. Councils would also be able to require stock exclusion in areas of high ecological value.
Government has signalled a national regulation for excluding dairy cattle from rivers and streams, which could be introduced in mid-2017.
Primary Industries Minister Nathan Guy said today that farmers were making fast progress in voluntarily fencing off waterways, and 95 per cent of dairy cattle were now excluded from rivers and streams.
He said other types of animals would be excluded "in time".
"I think by and large farmers see this as a good thing. They realise that our markets are demanding more in this space. So I think that they will say ... they're on board."
The forum also recommended that industrial and commercial users of water should be required to install water meters. Farmers who used more than 5 litres of water a second were already required to have meters.
Dr Smith said the proposal "has some merit" and he did not believe it would affect residential households.
The forum's report was welcomed by various sectors, including environmental groups, business and local government.
But it was criticised by Green Party MP Catherine Delahunty, who said it had not focused on water quality but on allowing commercial interests to use water cheaply.
The forum is made up of more than 60 organisations including environmental advocates, business, NGOs, energy companies, iwi and scientists.
Federated Farmers, a member of the forum, gave its tentative support to the newest report.
Water spokesman Chris Allen said the National Council's main reservation was how councils could interpret the clauses which related to iwi interests.
"The draft report suggests potential options around this but should not be interpreted as giving specific direction to the government," Mr Allen said.
"We are concerned that some local governments may pre-empt negotiations between iwi and central government by unreasonably locking up water, creating a gridlock on its management."
