Ngāruahine iwi hopes to build housing at marae and near small towns at Manaia and Okaiawa.
But the pouhautū of Te Korowai o Ngāruahine, Emma Gardiner, told the council's iwi liaison committee that zoning and infrastructure were in the way.
"We are not able to re-engage with our marae because of these two issues and these two barriers."
Kaumātua Sandy Parata told the committee Ngāti Ruanui also wanted a papakāinga at Taiporohēnui marae.
"But the thing is fitting on to the town water, all those procedures and it seems to get more and more difficult. I think the council would actually stop that from happening, from latching on to the town water to service our papakāinga."
South Taranaki District's environmental services group manager Liam Dagg said changing the district plan might help but was a complex option.
He said plan changes could be muddied by central government moves to repeal the Resource Management Act and radically reform water and wastewater rules.
He favoured setting up a mechanism under an improved relationship between iwi and council.
The council was close to adopting a new relationship strategy with iwi after months of discussions.
Dagg said a better relationship could help overcome frameworks of rules blocking particular papakāinga proposals.
"How do we go around, or through or over some of those frameworks? There's a view around the room that we've got to keep red tape to a minimum."
Mayor Phil Nixon agreed better a relationship would help cope with new demands for non-marae based papakāinga housing.
"Now actually there's a real appetite for papakāinga being developed in other areas and so we need to be able to work with iwi and whatever we have in place to allow that to happen."
Emma Gardiner said South Taranaki needed to take advantage of the Government budget announcement of $350 million for infrastructure to enable housing for Māori.
"Hopefully as iwi, and with council, we can look at how we can better leverage that to enable us to have papakāinga in our rohe."
Associate Māori Housing Minister Peeni Henare said the infrastructure spend is on top of another $380 to build Māori housing, including papakāinga.
Henare said iwi getting things right with councils was crucial.
"Our housing aspirations are huge and to unlock some of the whenua that is in Māori hands you have to have the infrastructure… but we can't support that just bare-faced, it has to be something that actually if we do this we see Māori housing aspirations realised."
Emma Gardiner said Te Korowai o Ngāruahine was now working with hapū to set up its own housing strategy that would shape dealings with council and others.
"It will be about front-footing to our council – this is what our housing strategy is, this is what our needs are and these are the matters we need you to address."
She says hapū will decide what counts as success for papakāinga development.
"Everything has to be underpinned by our mātāpono – our values… It's not just a house it's a way of living – and our needs of our whanau will be different than a stock standard housing development."
