New Justice Minister Andrew Little has revealed in his first day on the job that Teina Pora's $2.5m compensation for wrongful imprisonment will be increased to match inflation.
Pora spent 20 years in prison for a murder he did not commit.
The High Court ruled that Pora's compensation should be inflation-adjusted, but the National Government had reserved the right to appeal.
"The High Court was pretty clear that when Cabinet considered it last time they hadn't considered adjusting by inflation as a matter of fairness. The High Court has now said that the government must do that, so we will do that," Little told RNZ this morning.
"I hope that that will be as quickly as possible."
Little said during the election campaign that Pora deserved more compensation.
He plans to study the legal advice provided to the previous government.
"I'm told that there has been some advice that maybe has some contrary recommendations, and once I'm sworn in as minister I'll be obliged to look at that, but I'm equally obliged by the High Court ruling to now consider the issue of adjusting for inflation."
Labour has also previously called for an independent review commission to investigate Pora's case and others.
Pora's lawyer, Jonathan Krebs, has previously said that an actuary had estimated the inflation would add $500,000 to $600,000 to the compensation.
Investigator Tim McKinnel, who has championed Pora's case since 2009, said the news was "very encouraging".
"Obviously as the new Minister of Justice, he has to go through proper process, but it's an encouraging sign and in stark contrast to the last nine years. Almost every experience in the past eight to nine years with the Crown and Crown agencies has been one of resistance," he said.
The "open-minded and fair approach" of the incoming Government was a "welcoming relief", McKinnel said.
McKinnel had yet to speak to Pora about the news.
"But he's aware that the Labour Government was certainly open to looking at this issue, and it's very encouraging to us."
Pora was wrongfully convicted of the 1992 rape and murder of Susan Burdett. He spent 20 years in jail before being released on parole in 2014.
The Privy Council quashed his convictions in 2015, and in 2016 he received $2.52 million and a government apology.