ACT Party leader John Banks says he welcomes changes to the local body laws governing donations, saying he was the victim of a law that is unclear and unfair.
Mr Banks received large donations from Sky City and internet millionaire Kim Dotcom for his 2010 Auckland mayoralty campaign but did not disclose them because they were deemed anonymous.
Police found the MP for Epsom had solicited the donations but that there was insufficient evidence to prosecute him under the existing law.
The new law would put a stronger onus on candidates to disclose anonymous donors if known, and limit the size of anonymous donations to $1500.
Mr Banks says the changes are well overdue.
"As Charles Dickens said in 1838 the law is an ass - and it's important that the Government cleans it up. No candidate for public office should go through what I had to go through."
Local Government Minister David Carter says the law change is a direct result of the John Banks controversy, which highlighted failings in the current law.
"(The law) had not been reviewed since 2002. We had made a number of changes to the legislation under which central government politicians must comply; it was timely, therefore, to have a look at the reasonableness of the rules for local government politicians."
A new Local Electoral Amendment Bill will be introduced early in October and be law by the 2013 local elections.