ACT Party leader David Seymour has called Labour's move to dump a proposal to entrench part of the Three Waters legislation "a win for democracy".
Labour and the Greens last week supported the proposal, which would mean water assets couldn't be privatised unless 60 percent of MPs agreed to repeal the clause.
Entrenchment means legislation could only be amended or repealed if a special majority agreed to it in Parliament. Earlier this week, the entrenchment clause in Three Waters was labelled as "constitutionally objectionable" by the Law Society.
The clause would now be removed, House Leader Chris Hipkins confirmed on Sunday.
"It was a mistake to put the entrenchment clause in and the Government will fix the issue as soon as the House resumes on Tuesday," he said in a statement.
"We will do this by sending the Water Services Entities Bill back to the Committee of the Whole to remove the entrenchment provision."
ACT leader Seymour, in a statement after Hipkins' announcement, said his party welcomed the news.
"The Government has been thwarted in its sneaky attempt to entrench Three Waters provisions, this is a win for democracy but the Government's intentions remain concerning."
He said questions still needed to be answered.
"The Prime Minister has some explaining to do. How was it that this was discussed in Labour caucus, but she claims she wasn't across it?"
Hipkins and Prime Minister Jacinda Ardern had said they were aware of the previous attempt to get support for the 75 percent entrenchment but not of the 60 percent provision put forward by the Greens until after the fact. However, it was revealed earlier this week Ardern was at a Labour caucus meeting where a discussion about the entrenchment clause took place.
"The Greens and Labour have been grossly irresponsible, not realising what they are doing to New Zealand's constitutional framework while trying to fight the imaginary bogeyman of privatisation," Seymour said. "This time they have been caught out. They can't try and hoodwink New Zealand again."
Responding to questions from journalists on Thursday, Ardern confirmed she was in a caucus meeting when entrenchment was discussed.
"I've also discussed, and pointed out, that entrenchment is generally understood to be a threshold of 75 percent.
"Conversations in [the] caucus are kept in caucus but what we've already said is, we took a view on the principle of ensuring that a public asset, like water, is absolutely protected from privatisation and I think that's a view generally shared by New Zealanders."
Hipkins said on Sunday the Government would be asking the National and ACT parties to provide assurances about maintaining public ownership of water assets.
