A new bill will reverse a ruling by the House of Lords which made it harder for victims of the asbestos-related cancer mesothelioma to claim their full compensation payouts.
The Law Lords sided with employers, who said where claimants had worked for more than one company, firms should only pay a proportion of the compensation.
But the Government's new Compensation Bill means hundreds of mesothelioma victims could again claim full compensation from their former employers.
An amendment also means victims who lost out when courts refused to adjourn their cases can now apply to seek the full value of their award.
Fraser Kemp, MP for Houghton and Washington East, said: "This is great news. There will be lots of people affected, for Wearside this is a massive issue.
"The Government felt the Law Lords ruling was unfair and unjust and is right to amend the law so that victims and their families can increase their chances of compensation."
A test case involved a compensation claim brought by Sunderland widow Mary Murray.
The 84-year-old was awarded £45,000 in March 2004 after her husband, John, contracted the fatal illness through exposure to asbestos during his time as a welder in various North East shipyards.
Mr Murray died in 1999, but one of his employers, British Shipbuilders (Hydrodynamics) Ltd., argued it should only pay a portion of the compensation because it had only contributed towards 42 per cent of Mr Murray's asbestos exposure.
The House of Lords sided with the employers, but weeks after the ruling Prime Minister Tony Blair gave his backing to a campaign to reverse the decision.