The decision has been condemned by a privacy lawyer but supported by the mayor and a real estate company.
Senior Sergeant Mark Van Der Kley said the move was sparked by police concerns that bad tenants were often linked to crime.
Mr Van Der Kley said he was determined to rid the town of 'dishonest, law-breaking people ... one way to drive them out is to make sure that if they want to break the rules, we can make it hard for them to rent a house in Kawerau'.
The register would be strictly confidential and restricted to registered landlords. If a landlord phoned with the name of a prospective tenant, the only information he or she would be given was the former landlord's contact details.
But Wellington lawyer John Edwards, who specialises in privacy, said the police had no business setting up registers of tenants.
'The police do not have a role in blacklisting tenants ... There is a Tenancy Tribunal for that purpose.'
A spokesman for the Privacy Commissioner said the police were not necessarily doing anything wrong.
However, operators of tenancy databases needed to take reasonable steps to ensure personal information about tenants was accurate and that information was secure.
Landlords should also notify tenants at the start of their tenancy that their details might be referred to the database if there was damage to the property or if they left owing rent.
Kawerau mayor Malcolm Campbell, a former landlord, welcomed the register, saying finding good tenants was a constant battle for landlords.
'Appearances can be deceiving and it is so easy to get caught out.'
He also supported any move to rid Kawerau of criminals.
'Our police are working hard towards making this a better place to live, and getting rid of bad tenants sounds like a good idea. Tenants who trash the houses leave a blight on the whole street and make it all look untidy.'
Kawerau real estate agent Margaret Jensen, of LJ Hooker, which manages more than 130 rental properties in the district, said the register was a good idea and would give any nervous investors peace of mind.
'We have so many inquiries from investors and many of our sales are to them. But unfortunately Kawerau has a bad reputation, and this need not be the case.'
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