If they earned $A53,000 over five consecutive years ($NZ57,000) between 2001 and today, they will eventually be able to apply for permanent residence and eventually apply for citizenship.
It is estimated that the policy will allow up to 100,000 of the 305,000 New Zealanders who have arrived since 2001 to become Australians with full rights of citizenship.
Australian Prime Minister Malcolm Turnbull made the announcement in Sydney today after talks with New Zealand Prime Minister John Key.
The treatment of Kiwis who arrived in Australia after 2001 has been a growing point of contention in an otherwise very close relationship between the two countries.
The changes in 2001 withdrew several types of benefit (unemployment, youth and sickness) for New Zealanders - who enter Australia on a Special Category Visa.
But the most significant change was to make it much harder to get citizenship.
It required Kiwis to compete with other immigrants for permanent residence - which is capped - instead of being able to skip that and apply directly for citizenship.
Some research has estimated that fewer than 10 per cent of New Zealand arrivals between 2006 and 2012 were granted permanent residency.
- By Audrey Young
