Wellington - Seven Maori tribes became New Zealand's biggest forest owners on Wednesday in a multi-million-dollar compensation package from the government for past injustices under European rule.

It was the biggest settlement for grievances negotiated under terms of a treaty Maori chiefs signed in 1840 with representatives of Britain's Queen Victoria when the first immigrants settled.

Deputy Prime Minister Michael Cullen said that Maori leaders and the government were world leaders in developing a process of reconciliation with indigenous people and redress for past injustices.

He told hundreds of Maoris who travelled to parliament for the occasion, "It is a tragedy of our history that in the century and a half that followed the signing of the treaty, the Crown failed to uphold its part of the bargain in so many ways.

"We failed to deliver on our obligations of partnership and respect. We failed to deliver full equality for Maori and we failed to protect the rights of Maori - both their basic human rights and their rights of property."

A collective of tribes with more than 100,000 people in the central North Island will benefit from the agreement which gives them 176,000 hectares of state forest land, cash in accumulated rentals and a guaranteed annual income.

Cullen said the deal gave the tribes an asset worth about 500 million New Zealand dollars (about 380 million US dollars).

He said New Zealand was a lesser nation as a result of the state's failure to uphold its obligations to many generations of Maoris.

The treaty provided an opportunity to show that with goodwill, it was possible for new settlers and indigenous people to gain and learn from each other, Cullen said.

"But almost immediately, that opportunity slipped away. In the end, our colonial experience was classic, not unique - the mistakes of other nations that we had the chance to avoid, we instead repeated." (dpa)