Teina Pora, who was wrongly convicted for rape and murder for 20 years, will get an inflation-adjusted compensation payout, the Justice Minister Andrew Little says.
He will receive almost an extra $1 million in compensation, as well as $45,000 in costs.
This brings the total compensation package to just over $3.5 million. In August, he won a High Court case challenging the compensation he was paid for his wrongful imprisonment.
Mr Little said he has spoken to Mr Pora's lawyers and there will also be a review of the Cabinet guidelines that are used to determine the amount of compensation awarded in cases of wrongful conviction and imprisonment.
Watch: Teina Pora's lawyer Jonathan Krebs and private investigator Tim McKinnel speak about the extra compensation -
Teina Pora's lawyer Jonathan Krebs said his client was incredibly grateful for the support he received, and was pleased it was now over.
He said Mr Pora also wanted to thank the media and journalists who got behind his case.
Mr Pora compensation was based on 1998 guidelines that award $100,000 a year for loss of liberty.
The retired High Court judge who considered Mr Pora's compensation claim had recommended the figure take inflation into account but the government rejected that, saying the original offer was fair.
In a judgement released in August on Mr Pora's High Court challenge to the amount he was paid, Justice Ellis said the Cabinet guidelines do allow for inflation adjustment, where it is in the interests of justice to do so.
An assessment commissioned by Mr Pora's legal team suggested he should receive an extra $500,000 to $600,000 on top of the $2.5m paid out last year.
Mr Pora was wrongfully jailed for the 1992 rape and murder of Susan Burdett.
The new government previously confirmed it planned to raise Mr Pora's payout to meet inflation.
In 2016, Teina Pora received $2.5 million in compensation.
The outgoing National government was considering an appeal, but the new Labour-led administration supported the raise.
"It was always our view that at the time Teina Pora was awarded his compensation package, it was only fair, that given the criteria for setting that compensation was roughly 10 years' old, that Mr Pora's compensation should also be inflation adjusted," Jacinda Ardern said at the time.