Employers in New Zealand and Australia will be able to check the criminal records of people living in either country when vetting job applicants.
A trial involving the sharing of criminal records between New Zealand and Queensland is to be made permanent and extended to the other states.
The decision was announced by Justice Minister Judith Collins and Australian Attorney-General George Brandis on Saturday.
Ms Collins said often New Zealand employers needed to check Australian criminal histories to make fully informed decisions.
She said it was particularly important for jobs involving working with children and vulnerable people.
"There's something in it for both countries and certainly for businesses who are employing people and also for our government agencies, DHBs, schools for instance, they'll be able to access information and give themselves comfort around the people they're employing."
Scheme praised by employers
Business New Zealand chief executive Phil O'Reilly says it will help create more freedom of movement between the two countries with employers confident they are making the right hiring decisions.
"Up until now it's been quite hard to check criminal history, now that goes to the confidence of the employers in either Australia or New Zealand to hire people, so it'll help that freeing up of the labour market because employers will be able to have more confidence to make sure that the person is who they say they are."
Mr O'Reilly says it will also help employers working in the care and education industries protect the vulnerable.
The co-author of a Ministerial Inquiry into the sex offender Henry Te Rito Miki, who stole identities to trick employers into thinking he was a qualified teacher, is also praising its introduction.
Judith Aitken says it will improve children's safety and the new development involves the private sector and government agencies.
She says private employers may now seek information that government agencies are entitled to seek about prospective employees.
About 600,000 New Zealanders live in Australia.