CALEDONIA, Ont. - Six Nations protesters said Thursday a $125-million offer by federal land-claim negotiators is not enough to address a number of outstanding claims, and warned that if Ottawa continues to offer financial compensation rather than land, talks could go south.

Negotiator Janie Jamieson said that in offering the money, Ottawa is ignoring aboriginal demands. She said if that continues, First Nations protesters will have no choice but to pull out of peaceful talks.

"It's happened before and it could happen again," Jamieson said, referring to the prolonged standoff with police at a former housing development site in this southwestern Ontario community.

Jamieson said the prospect of Six Nations negotiators accepting the proposal is bleak.

"In my opinion, the $125 million doesn't begin to address the damage done to our water system (by the development)," she said.

Ottawa offered the money Wednesday with the condition that aboriginal protesters end their 15-month occupation of the Caledonia site. In return, Ottawa asked for a release from the Six Nations on four Ontario claims.

Six Nations presented federal negotiators with a two-page response to Ottawa's offer that said a settlement "must provide for the return of land," the Hamilton Spectator reported.

Mohawk Chief Allen MacNaughton was also unhappy with the proposal, but acknowledged it represents progress.

"It's nowhere near what we want or what we've expected, but it does open the door for talks."

Other protesters were less diplomatic, calling the proposal "a slap in the face."

Nathan Isaacs said no amount of money could ever convince him to leave the land he maintains belongs to his people.

"I want my kids to scrape their knees on dirt, not pavement," he said. "I want them to seek shade under a tree, not next to a building."

On the day of the release of the Ipperwash inquiry report, Isaacs said he sees similarities between conditions during that standoff and those at Caledonia, from overly suspicious police to a government using delay tactics at the negotiating table.

"There's repercussions to everyone's actions," he warned. "The federal government dragging their feet - there could be repercussions to that."

Said fellow protester Steve Powless: "I find it very insulting that they think our people can be bought."

But land and money are tied together, said federal Indian Affairs Minister Jim Prentice.

"The ability I have under the policy is to advance money," he said outside the House of Commons. "And the money, of course, can be used to secure land, and that land can be converted to reserve status.

"I don't intend to negotiate through the media. We have extraordinarily good negotiators at the table, and I think the response of the First Nation was quite respectful."

Haldimand County Mayor Marie Trainer said there is potential in the government's offer, but admitted there is still much work to do.

"Just having the federal government meet the heredity chiefs, that hasn't happened in 80 years," she said. "It's a huge step."

Trainer said she plans to meet with Prentice next week to discuss security measures in Caledonia.

Most of the southwestern Ontario claims revolve around allegations the federal government mismanaged land and money in the 19th century.

"All Canada can do in order to live up to our lawful obligations is to determine what that loss was, what legal obligation we had, and to offer them compensation for that," said federal negotiator Ron Doering.

One claim involves the flooding of lands in Dunnville, Ont., to accommodate the building of the Welland Feeder Canal in 1829.

The other claims are the Burtch tract, which involves compensation for alleged land mismanagement; Moulton Township, which involves allegations aboriginals weren't adequately compensated in the 1840s; and the investment of Six Nations money into the Grand River Navigation Co. in the 1830s.