The Papua New Guinea government of Peter O'Neill says medical treatment and services will be free for all patients in government hospitals with immediate effect.
The Post Courier newspaper reports the policy was announced by the administration, declaring it a major intervention programme similar to its free education policy.
The move comes amid a protracted political crisis which has led to two rival governments claiming to be legitimate.
The O'Neill government says 160 million US dollars will be disbursed to rehabilitate all referral and provincial hospitals in a bid to step up efficient healthcare delivery.
23 million dollars has been allocated to Port Moresby General Hospital.
Mr O'Neill says government cannot sit by and watch people dying needlessly because they cannot afford to pay for the cost of receiving appropriate medical treatment.