Mr Palmer said an "emotional" response to whaling was unrealistic
Allowing whaling nations to kill a limited number of the animals is the only way ensure control, New Zealand's representative on the issue has said.
Former PM Geoffrey Palmer said attempts to reach a global deal on whaling would fail unless nations could compromise.
Australia, which wants a total ban on whaling, has expressed alarm at Mr Palmer's comments, and said it could not back such a scheme.
Japan, Iceland and Norway together hunt more than 2,000 whales each year.
Mr Palmer, who represents New Zealand on the International Whaling Commission (IWC), said whaling nations had increased the size of their hunts in recent years.
But he said the main problem was that there was no effective way of controlling how many whales were hunted.
He said a compromise would lead to "a big reduction in the total number of whales killed compared with now".
Mr Palmer said that if the IWC did not agree to a compromise when it meets in Morocco in June, all control over whaling could be lost.
"There is a big risk of that and I don't relish it," he said.
Japan has not stated publicly how far it is prepared to reduce the size of its annual Southern Ocean hunt.
Mr Palmer said that the "emotional attachment" to a total ban on whaling was unrealistic.
"There is a great deal of unhappiness in New Zealand about killing whales, and that's true of other public opinions in many countries," he said.
"But the truth of the matter is that not all cultures or all nations see that issue the same way, and because of that you have to arrive at an international accommodation under a treaty arrangement."
THE LEGALITIES OF WHALING
Under the global moratorium on commercial whaling, hunting is conducted in three ways:
Objection - A country formally objects to the IWC moratorium, declaring itself exempt. Example: Norway
Scientific - A nation issues unilateral 'scientific permits'; any IWC member can do this. Example: Japan
Aboriginal - IWC grants permits to indigenous groups for subsistence food. Example: Alaskan Inupiat
New Zealand's Foreign Minister Murray McCully said he thought a compromise deal was worth making, saying that the alternatives to conducting further talks were "truly awful".
New Zealand, Australia and Japan are members of a small group of countries that has been exploring the potential for a compromise for two years.
It faces a deadline of 22 April to come up with a submission to go forward to the IWC's annual meeting in June.
But Australia, which has threatened to take Japan to the International Court of Justice if it does not stop whaling in the Southern Ocean, reacted angrily to the comments.
Federal Environment Minister Peter Garrett said he was "alarmed and very concerned that New Zealand would support a proposal that is flawed and represents a huge compromise to pro-whaling nations".
"Australia cannot support the compromise package now being discussed in the IWC," he said.
Japan abandoned commercial whaling in 1986 after agreeing to a global moratorium but continues to target more than a thousand whales each year under the auspices of a scientific research programme.
Conservationists say the whaling is a cover for the sale and consumption of whale meat.
Iceland and Norway both "objected" to the moratorium - a permitted procedure under IWC rules - and also carry out annual hunts.