The ACT party has called for a complete overhaul of the way compensation cases were considered by the Crown.
On Tuesday the government released its decision on the David Bain case, saying he would not receive any Crown compensation, after Cabinet was advised he had not met the threshold proving his innocence.
But it has agreed to make an ex-gratia payment of $925,000 to Mr Bain in the interests of bringing closure to the long-running claim.
Mr Bain spent 13 years in prison for the 1994 murder of his family in Dunedin before being acquitted in a retrial seven years ago.
He filed for compensation for wrongful conviction and imprisonment in 2010.
After several reports on the matter, the Minister of Justice, Amy Adams, received a final report in January that found Mr Bain had not met the threshold to prove his innocence, so should not receive compensation.
Ms Adams said the ex-gratia payment was offered solely to avoid further litigation and costs to the Crown.
She said Cabinet agreed there was merit in bringing an end to the case.
"I don't think anybody whether it's the taxpayers, Mr Bain, or the Bain family benefit from this being dragged out."
However, ACT Party leader David Seymour said he remained sceptical about the outcome.
He questioned why the government would require so many different judicial reviews on Mr Bain, if it was not seeking a certain answer.
"The frankly mickey mouse back and forth that we've seen over the David Bain case for six years."
Mr Seymour said the system used for compensation cases was not fit for purpose.
"We need to revisit the way that we deal with these last resort cases. There needs to be something better than one or two individuals in Cabinet exercising what appears to be their own personal preferences, shopping for one judicial review after another."
Ms Adams said the case was completely different to that of Teina Pora, who was awarded $2.5 million by the Crown, because his innocence was very clearly established.
Green Party co-leader Metiria Turei said the process for compensation was flawed.
"New Zealanders are rightly concerned that there is clearly no just process for dealing with these compensation claims.
"We need to be able to trust the system to process those applications properly and we've got two examples in recent times where the process has been very very flawed," she said.
Labour Party justice spokesperson Jacinda Ardern said the process could be seen to be politicised.
"We've got to go to great lengths to make sure that in these cases that every single case is seen to be dealt with fairly and in a robust way."
"The process that this case has gone through, dragged out for more than six year, has definitely left the crown open to being challenged," Ms Ardern said.
The government said the process was not a shambles, but it had taken far longer to settle than most people would have wanted.