Farmers had used Overseer, alongside advice, to improve practices and freshwater outcomes, Parker said.
"We encourage farmers to continue their vital efforts to reduce nutrient losses."
The Ministers said they recognised the urgency of the work, given the 2024 deadline for Regional Councils to develop RMA plans under the Essential Freshwater reform package.
Farmers and growers had put in a significant amount of work and investment over many years to boost environmental outcomes on-farm, Damien O'Connor said.
"The Government will seek to ensure improved tools for estimating nutrient loss are transparent, accurate and effective."
Options to be considered included developing a risk-based index, developing a next-generation Overseer to address the panel's concerns, greater use of controls on practices to manage nitrogen leaching, and potentially longer-term - developing a new approach altogether, O'Connor said.
Parker said it was vital farmers and councils had some certainty over the next year. Councils will continue to implement their plans and the freshwater reforms.
O'Connor said: "It's essential that farmers and councils using Overseer have some certainty on how to proceed. For this reason, the Government will support work on a next generation Overseer."
Regional councils would continue to administer consents to manage freshwater at the farm level, although there may need to be adjustments in the approach in some cases, Parker said.
"We've spoken with councils, and they can proceed with developing plans on the basis that nutrient loss estimation, and risk assessment tools will be available for the preparation of those new plans by the end of 2024."
"We need to build on the progress that farmers have already made," O'Connor said.
Over the coming months, officials will develop best practice guidance for models used in environmental regulation and these will feed into approaches and tools in the longer term.
The Government supported the development of a next generation Overseer and other nutrient management tools, O'Connor said.
"Having fit for purpose tools now will support our farmers to deliver long-term environmental benefits across New Zealand."