A law change to remove the subsequent child policy has passed its final hurdle in parliament, so from November, parents who have another child while on the benefit will no longer be forced to return to work when that child turns one.
Introduced in 2012 as part of the National government's welfare reforms, the subsequent child policy was meant to get more people off the benefit and into work.
But Social Development Minister Carmel Sepuloni said that didn't happen.
"The reality is that I got advice from the Ministry of Social Development to say that there is no evidence to support that it did that in any way," she said.
There are more than 11,000 beneficiaries who are affected by the policy.