The changes to the Control Orders Act and the Terrorism Suppression Act follow the introduction of the Counter-Terrorism Legislation bill in 2021 in the wake of a knife attack on several people at an Auckland supermarket by a man with known extremist views.
"While no law can ever stop a motivated terrorist from undertaking an attack these changes will go a long way in preventing, disrupting and limiting their ability to do so," Justice Minister Kiri Allen said in a statement.
The changes include expanding the criteria for who can have restrictions placed on them in the community, increasing flexibility on whether someone under a control order has their identity suppressed, and making it more difficult for those categorised to have the designation of "terrorist" removed.
After the mall knife attack in 2021 the government sought a review on how to improve laws to prevent a similar attack happening. The man, who was shot dead by police, was inspired by the Islamic state militant group and was being monitored constantly by security personnel after his earlier release from prison.
It was the second extremist attack in the country in a little over two years after the massacre by a white supremacist at two mosques in Christchurch in March 2019 that killed 51 people and injured dozens more.
The changes to the Acts now have to make their way through parliament and are unlikely to be finalised before March 2023.