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"Surrogacy has become an established method of forming a family for people unable to carry a child themselves. However, the laws that apply to surrogacy are outdated and need to change," Allan said in a statement on Tuesday.
Parents must adopt a child born by surrogacy under the 70-year-old adoption laws.
The committee is considering introducing a new process to determine legal parents rather than adoption, establishing a surrogacy birth register, clarifying payments relating to surrogacy and accommodating international surrogacy arrangements, the statement said.
Juanita Copeland, a board member of Fertility New Zealand, a non-profit organisation, said the bill meets a need for greater clarity and protection for everyone involved in surrogacy.
"It will make it easier for people to build the family they have always dreamed of while honouring the tremendous gift that surrogacy is," Copeland said.
The legislation is unlikely to get before the House of Representatives before the election on October 14.