Finance Minister Bill English will revert to claiming only $24,000 a year for living in his Wellington family home, instead of $47,000 he was on track to receive as a minister.
He will pay at least $12,000 back to the taxpayer and put himself on the same footing as other out-of-town ministers who live in their own properties in Wellington, which is also equivalent to what backbenchers can claim.
In the first half of the year, Mr English cost the taxpayer $23,763 in rent, power and cleaning for his home.
Under the revised arrangement, which has yet to be finalised, he is unlikely to have the taxpayer footing his power or cleaning bill.
Those perks come with the package for other ministers supplied with accommodation through Ministerial Services in Internal Affairs.
Mr English is in the unique position of having had his Karori home declared an official ministerial residence, leased from an English family trust and supplied back to him - with the power and a little cleaning thrown in.
Of the $23,763 Mr English's housing has cost in the past six months, $21,233 was for the rental, $1990 for the power and water bills and $540 for cleaning, according to Department of Internal Affairs figures supplied to the Herald.
On that basis, he was headed for a $47,000 annual bill.
Mr English has been telling New Zealanders to exercise restraint in the recession while being paid almost twice the allowance he got last year for living in the same house.
"I understand this does not look good," he said yesterday, the fifth consecutive day of bad publicity. "It doesn't really matter what the technicalities are and from my point of view, particularly as the Minister of Finance, that is not a sustainable position."
Out-of-town ministers living in their own houses have been limited to the same as ordinary MPs; the reason Mr English was able to claim more was that because his home was owned by a trust he had no beneficial interest in.
Mr English said the option of getting the lower allowance had never been put to him and it should have been.
Prime Minister John Key said last night that he supported Mr English's decision but had had no input on it.
He also reiterated that Mr English had not broken any rules.
Mr Key has ordered a review of ministerial housing allowance rules to be completed by the end of the month.
It will look at whether ministers taking supplied houses while renting out their Wellington properties should receive the same as other ministers.