A retired judge has been asked to report back on whether David Bain is probably innocent - and, if the answer is yes, whether he is innocent beyond reasonable doubt.

Justice Minister Amy Adams said "clarified" instructions had been given to Ian Callinan, a former Justice of the High Court of Australia.

He will head a new inquiry into Mr Bain's compensation claim.

"I am confident we won't have a repeat of the misunderstandings that we saw in the earlier report," Ms Adams said.

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Within six months Mr Callinan will say if he is satisfied that Mr Bain has proven his innocence on the balance of probabilities.

If that is that case, he has also been asked to say whether he believes Mr Bain's innocence has been proven beyond reasonable doubt.

That is a significant question and one not asked of former Canadian Supreme Court Justice Ian Binnie.

His 2012 report recommended compensation based on the view that Mr Bain was probably innocent.

Mr Binnie noted that he was instructed that probable innocence was a minimum requirement for compensation.

Unhappy with the report, the then-Justice Minister Judith Collins ordered a review of it by Robert Fisher QC, which found he made several errors of law.

A new inquiry was announced a month ago, with the Government agreeing to set aside all previous advice on the matter.

It was necessary because the Cabinet said it did not have enough information to reach a decision on a potential payout for Mr Bain, who spent 13 years in prison before being found not guilty of murder in a retrial.

Mr Bain was imprisoned in 1995, but was freed after being found not guilty in a second trial in 2009.

Mr Callinan will report his opinion on Mr Bain's proof of innocence, which will be considered by Cabinet before any further advice is sought.