Veterans' Affairs Minister Matt Keogh introduced legislation on Wednesday that would roll three laws into one to streamline the process for veterans and families making claims.
Simplifying the system was the first recommendation of an interim report by the royal commission into defence and veteran suicide.
The inquiry found the complex compensation claims process had harmed the mental health of former soldiers, sailors and air personnel.
The legislation changes were recommended by the Royal Commission into Defence and Veteran Suicide. (Joel Carrett/AAP PHOTOS)
Mr Keogh said the simplification would alleviate much of the stress and anxiety veterans experienced when lodging claims.
"This legislation is a significant step in ensuring a better future for defence personnel, veterans and families," he said.
 Veterans and families would be able to get much-needed support faster and without as much red tape, he added.
The royal commission recommended new legislation be in place by July 2025.
But the bill put forward by the government won't kick in until July 2026.
Army veteran and former RSL sub-branch president Lucas Moon said initial feedback had raised concerns about "ambiguity" surrounding dependent and family payments under the legislation.
"In the modern context of separations and blended families, there is uncertainty about how these provisions will be applied," he said.
"There is a collective hope that future generations of veterans will not face the (same) delays."
Mr Keogh said the changes would allow the department to focus efforts on vulnerable claimants.
Veteran's Affairs Minister Matt Keogh introduced the legislation to parliament. (Mick Tsikas/AAP PHOTOS)
Benefits from existing schemes will continue unaffected, with fresh claims to be covered by the new legislation.
Labor delayed the implementation schedule as it sought feedback from veterans and to give people enough time to learn the new framework while making system upgrades.
Department of Veterans' Affairs projections in the 2024 federal budget show payments for rehabilitation and compensation claims are expected to grow by $6.5 billion over the next five years.
During a parliamentary hearing on Tuesday, the department's secretary Alison Frame said there had been no work done to determine the cost or framework for supporting foreign nationals who join the Australian Defence Force.
More than 500 extra staff were hired to clear a huge backlog, which at its peak in late-2022 reached 45,000 in the queue.
Fresh claims are now being dealt with in a two-week period and, for some veterans, support is being provided in less than two months from the date of lodgement.
The royal commission will hand down its final report in early-September.
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