Prisoners who were sexually abused while in institutions as children will now have the opportunity to apply to the national redress scheme.
Federal social services minister Amanda Rishworth said the changes to the scheme, which passed the senate on Wednesday, would make it more trauma-informed and focused on victim-survivors.
"This is not the end of our work," she said.
"It is vital we continue to listen to victim-survivors so we can deliver responsive, effective changes that meet their needs and those of future applicants.
"Every improvement to the scheme makes a real difference in the number of people we can reach and support."
Community legal centre knowmore, which represents survivors of child sexual abuse, welcomed the changes but said more funding would be needed to help support the extra applicants.
"No child should suffer abuse," knowmore chief executive Jackie Mead said.
"The government has a responsibility to ensure that all survivors can access redress, including survivors in jail.
"We estimate there are many thousands of survivors in jail who will now be eligible to apply for redress."
The national redress scheme was created in response to the Royal Commission into Institutional Responses to Child Sexual Abuse - which handed down its final report in 2017 - but excluded prisoners and people who had been convicted of a serious crime.
A review of the redress scheme in 2021 recommended expanding it to include people in jail and refining the special assessment process for those convicted of serious crimes - but still excluding people convicted of murder and some sexual offences.
More than 10 per cent of the 8000 survivors who spoke to the royal commission in private sessions were in jail at the time.
Almost two in three survivors were male (63.6 per cent) and 15 per cent of all survivors identified as Aboriginal and Torres Strait Islander people.
Gary Oliver, knowmore director of First Nations engagement, told AAP many Indigenous people in prison shared their stories with the royal commission with no expectation of compensation or redress.
"The people who are survivors, not everyone has a wonderful life going forward," he said.
"Not everyone has the opportunity for a job and a house and a stable life and some people become incarcerated because of the trauma ... and that's the sad truth.
"So the opportunity now is to help them set things right for themselves and, hopefully, there'll be an opportunity for them to be heard and to have their claims in place for when they're released."
Mr Oliver warned that vulnerable prisoners - some of whom have low literacy levels - needed protection from claim farming, in which unscrupulous operators pressured people into making compensation applications without understanding the details.
The redress scheme will contact applicants (or their nominees) who are affected by the changes once they come into effect.
The changes to the national redress scheme that are now law are:
* allowing applicants to provide additional information when requesting a review of a finalised application
* reducing the circumstances where applications from those with a serious criminal conviction must undergo a special assessment process
* removing restrictions preventing incarcerated survivors from lodging an application
* enabling reassessment of finalised applications if a relevant institution later joins the scheme (this change will take effect at a later date).
National Sexual Abuse and Redress Support Service 1800 211 028
13YARN 13 92 76
Aboriginal Counselling Services 0410 539 905
Lifeline 13 11 14
beyondblue 1300 22 4636
1800 RESPECT (1800 737 732)
