Minister for the Environment David Parker says the Government will "never" introduce a direct cap on the number of cattle farmers can keep.
Instead, it will introduce limits on nutrient run-off from farms, he says.
Mr Parker told TVNZ's Q+A on the weekend that in some parts of New Zealand, the number of cows per hectare is higher than the environment can sustain.
He told Newshub there's a lack of unification on nutrient run-off.
"There will never be a direct cap on the numbers of cows and cattle," Mr Parker said.
"We have to have environmental limits on nutrients escaping into our rivers. Various councils have started that task, but they are having a scrap about it, which is slightly different in every part of the country."
The National Party says Mr Parker's comments are an attack on the regions and the Government is "out to get farmers".
"It's been clear for some time now this Ardern-Peters Government is out to get farmers - that can't be made any clearer than the Minister for Agriculture himself saying they'd be "no friend to the farmer".
"We saw them blindside the oil and gas industry the other day, now they've done the same to the dairy industry.
"Solving water quality issues is a team effort for urban and rural communities, and is not something to be imposed solely on farmers who've actually played a massive part in investing and working up solutions to help improve the way they operate."
But the dairy industry say they haven't been blindsided - and they want to work with the Government on improving water quality.
"We've been actively engaging with Minister Parker for some months now, so his comments were no surprise to us," Tim Mackle from Dairy NZ told Newshub.
"It's an important thing to us; it's an important thing to the Government. We are keen to work together".
Mr Mackle said it was too early to know the details, but there could be benefits to having the certainty of a consistent approach.
"We actually do support having consistency between regional councils across the country."
But he said it's not all about regulation.
"One of the most important things is to work together on a voluntary basis. The hearts and mind are the most important things for getting genuine change and policy changes don't necessarily do this."
Mr Parker said by the end of May, the Government expects advice from the Land and Water Forum on how to "divvy up nutrient discharge rights".
"If you have an environmental cap, how do you share it amongst the farmers who are contributing to that problem in a way that is fair to them and the environment?" he asked.
During the Q+A interview, Mr Parker said farmers should be encouraged to move toward farming crops like peaches. But he said New Zealand's high-wage economy is a barrier to such labour-intensive land uses.
Mr Parker suggested robotics could help out in the peach-picking department.
Mr Mackle of Dairy NZ agreed New Zealand "needs options", but at the moment, the market is keen for dairy.
Market demand for dairy has been "at times insatiable", he said.