Justice Minister Judith Collins has watered down legal aid reforms which aimed to save money by charging for family and civil disputes.
The minister announced this afternoon that charges for family and civil cases would drop from $100 to $50.
Interest would no longer be charged immediately, but would instead be imposed from six months after the final amount of legal aid debt was finalised.
A proposal to make it harder to get legal aid for less serious crimes such as theft, assault or careless driving has been dropped by the minister.
However, people who were not meeting their legal aid debt repayments would be prevented from getting further legal aid until they began clearing their debt.
Former Justice Minister Simon Power proposed the re-introduction of user charges for family and civil cases in April 2011, and set the amount at $100.
Ms Collins said changes to the Family Court had allowed Government to take a more moderate approach to reforming the legal aid system.
"Changes have been developed that affect all Court users equally, rather than only legally aided people. So, we now have a better range of solutions to ensure our legal aid system is sustainable,'' she said.
Family Court reforms included plans to charge feuding couples $900 if they sought state support to resolve their dispute. Parents would also be expected to represent themselves, without lawyers, on routine cases.
Ms Collins said legal aid expenditure had risen from $111 million in 2006/07 to $173m in 2009/10 - an increase of 56 per cent.
Of the outstanding debt established since 2006, around $35m was unsecured or not subject to a repayment plan.
"Our changes ensure the Bill strikes the best balance between targeting legal aid to where it is needed most, encouraging more people to resolve minor family and civil matters between themselves rather than through the courts, and ensuring people have access to justice services,'' said Ms Collins.
The New Zealand Law Society welcomed the minister's amendments, saying it had been concerned about the legislation's potential impact on vulnerable families.
Law Society Legal Services Committee convenor Liz Bulger said: "A credible and sustainable legal aid system must ensure that access to justice is available to everyone including the people who cannot afford to pay for legal services.
"In that respect we're glad to see that the user charge has been halved to $50 and the provisions relating to interest chargeable on legal aid repayment debt made easier for everyone."
Ms Bulger said she was relieved that the legal aid regime would be extended to family lawyers and Youth Advocates.
"Lawyers are still very concerned at the impact some of the changes proposed for the Family Court will have.
"However, there now seems to be some recognition that it is essential that lawyers appointed by the Court are independent of any parties to the proceedings," she said.