The Government will not appeal the Court of Appeal decision that says families should be paid to care for their disabled children.
Health Minister Tony Ryall said this afternoon he accepted that the policy of not paying close family members had to change.
A new policy would be developed over the next year.
Mr Ryall said the cost of paying parents would not be near the previously quoted figure of $450 million.
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He said the Human Rights Review Tribunal would consider what the families should receive at a hearing expected to take place in the next six months.
"The future policy needs to balance the interests of those who are being cared for, the families and the taxpayers. It will address the discrimination. But it must be affordable."
The Court of Appeal last month upheld a High Court decision that parents caring for disabled children were eligible for financial support.
This followed a Human Rights Review Tribunal ruling that the Ministry's policy of only paying carers who were not related to the patient was discriminatory.
The Ministry has contested the case three times at a cost of $ 1.4m to Crown Law.