Milford Sound is set for change, with the possibility of a ban on fixed-wing aircraft, overseas visitors having to pay to enter the area and a ban on cruise ships in the inner sound.

The government has confirmed that work by an expert group into the future of Milford Sound will proceed to its next stage.

The Milford Opportunities Project (MOP) Masterplan unveiled in Te Anau today follows four years work by cross-agency representatives, mana whenua, commercial interests and the wider community.

Tourism Minister Stuart Nash said tourism at Milford Sound Piopiotahi could not return to its pre-Covid state. Significant pressure from the 870,000 visitors in 2019 had undermined cultural and environmental values and infrastructure. As a tourist experience, it was crowded, rushed, noisy and unsafe, he said.

"The project is an excellent test case for a self-funded, sustainable tourism system paid for by visitors, with costs and negative impacts priced into the tourist experience rather than shouldered by New Zealand ratepayers and taxpayers," Nash said.

Transport Minister Michael Wood was enthusiastic about the project.

"There is great potential for a world-class zero carbon transport and tourism experience, supported by an effective and sustainable electric or hydrogen transport model.

"The Milford Opportunities Project group propose that New Zealanders will still be able to drive to Milford Sound Piopiotahi without charge, and to help preserve the landscape this will be managed with a permit system.

"The masterplan aligns with other strategic goals for transport, such as reduced emissions, increased the use of public transport and improved safety and resilience," Wood said.

Project governance group chair Dr Keith Turner said the project began in 2017, after concerns about the rapidly growing visitor numbers in Milford Sound Piopiotahi were raised by Southland District Council and the Department of Conservation.

"While Covid set back the numbers, we expect them to return because it is a rare opportunity to visit true wilderness," Dr Turner said.

A recommendation to more evenly distribute numbers through a park and ride and permit system, with International tourists paying a fee for their permit, would provide funding to many other elements within the masterplan, he said.

Other recommendations include a combined visitor centre and park and ride base at Te Anau and another in Milford Sound Piopiotahi, along with new hotel and staff accommodation; creating more visitor opportunities near Te Anau ( including both cycle ways and walking paths), in conjunction with the Fiordland Community Board; improved walking and some cycle tracks on the corridor; better walking and viewing opportunities at the sound, as well as improving the layout on the very limited flat area of Milford.

The masterplan also recommends that the airstrip at Milford Sound be closed and cruise ships not be allowed into the inner sound.

"We know this will be controversial and that we will be affecting people's livelihoods," he said.

"But the airstrip is in a poor state of repair, is already beginning to flood at extreme high tides, is very exposed to alpine fault tsunami risk and would be very expensive to rebuild to a modern and sustainable standard. It only carried about 3% of visitors in 2019.

"And the visual impact and risk of cruise ships are in conflict with the majority of land-based visitors, and they have other Fiordland options equally spectacular to visit."

Dr Turner said it was important to note the masterplan was making recommendations to Government, and detailed business plans on how the recommendations would become reality needed to be created.

"We were asked to come up with something innovative, something challenging, something that will change the way tourism interacts with environment and conservation. I feel we have done that and now the hard work of implementation and decision-making on how to implement it begins," he said.