Justice Minister Judith Collins has indicated she could water down a law change to stop prisoners benefiting from financial compensation for human rights breaches, saying she was concerned the bill would create injustice.
Ms Collins said the Prisoners' and Victims' Claims Amendment Bill was on hold for a "rethink" to make sure it was fair and did not effectively allow the state to escape consequences for wrongdoing.
That bill would mean any financial compensation awarded to prisoners which was not paid to their victims as reparation would be put into a general victims' fund set up by the Government to pay for services such as counselling and funeral grants.
Prisoners would no longer receive the left-over amount themselves.
Ms Collins said she was assessing whether the current temporary law which allowed victims to claim for reparation since 2005 was sufficient or whether it should be taken further as Simon Power's bill proposed.
"I just think it's really important that we get that right, that we don't go so far overboard in one direction that we end up causing injustices in another. I think it's important that we don't have injustices or wrongs done ..."
She said compensation was given only in rare circumstances, for breaches of human rights.
She has written to other parliamentary parties to seek their feedback and said she was hoping for common ground.
"I think most people would think it was fair enough if prisoners get large amounts of money and they have outstanding debts owed to their victims that the victims should get first call to that. But we already have some provisions in our current act."
Labour justice spokesman Charles Chauvel said National's bill effectively punished prisoners twice "so if they are going to have money taken off them, there needs to be some form of recognition of that, maybe a reduction in their sentence or something".
He said the law applied only to prisoners and only to compensation, rather than other windfalls such as Lotto.
"Our view is if you are going to have a regime that is designed to look after the victims of crime, you should take into account all those circumstances rather than just apply it to prisoners who get compensation from the Crown for something that happens to them."
Ms Collins said she would start discussing the issue with parties soon.
The law change
Current: Courts can award compensation for breaches of prisoners' human rights. Victims can seek redress from that, and the prisoner takes any left over.
Prisoners and Victims' Claims Amendment Bill: Victims can seek redress but any left-over money goes into a Government Victims' Services account to fund services such as counselling.