The Canadian Press has learned approximately 30 people will now receive payments under the program, which is meant to compensate soldiers and their families exposed to the defoliant in the 1960s who later became ill.
A number of families had gone public in recent weeks with their bureaucratic battles over the funds and the Veterans Ombudsman publicly rebuked the government for its handling of the file, saying the rules were being applied too restrictively.
Government sources say the number of complaints they've received led to a review of what one admitted was a "less than perfect" program.
Those people who are eligible for a payment but filed an application past the June 30, 2011 deadline will now receive funds.
The government is also loosening its application of rules on compensation for primary caregivers.
In one case, a widow was denied payment because her husband died in a nursing home and the couple of 50 years was technically not living together.
She and others like her will now receive funds, government officials said.
They will be informed via letter in the coming days.
MPs representing constituents affected by the rejection claims had also been raising concerns with Veterans Affairs Minister Steven Blaney, his spokeswoman said.
"As a result, Minister Blaney has instructed officials to review certain cases with more compassion," Codie Taylor said in an e-mail.
"This is just another way our government is standing up for Canadians.”
NDP Veterans Affairs critic Peter Stoffer said while the policy change is welcome, it shouldn't have taken public outcry.
"Every single time the government reacts," he said in an interview.
"They should be proactive. They just have to look at it and use some common sense and compassion."
Stoffer said the entire compensation program has been handled poorly since it was first floated by the Conservatives in the 2006 election campaign.
The end result was a set of rules being enforced by bureaucrats who were allowed no leeway in determining eligible cases, forcing the government to amend the program several times.
"We're talking about the heroes of this country and the families of these heroes," Stoffer said.
"We should not put them through the wringers of bureaucracy."
Veterans Ombudsman Guy Parent welcomed the changes and said it was proof the department and minister listen when people raise valid concerns.
But he said there are still challenges ahead for people trying to get compensation from the department outside the ex-gratia program for Agent Orange-related illnesses.
"There's still work to do," Parent said.
Agent Orange was part of a toxic cocktail of herbicides sprayed at CFB Gagetown in 1966 and 1967 by the U.S. military, with permission from Canada.
It's now known that exposure can lead to skin disorders, liver problems and certain types of cancers.
The federal government first announced a compensation program for soldiers in 2007 and extended the deadline twice.
Originally, the program had a controversial condition that required people to be alive on Feb. 6, 2006 — the date the federal Conservatives came to power.
That provision was later removed, which allowed spouses to make a claim.
A total of $114.5 million was earmarked, with the bulk used for payments of $20,000 apiece.
Government officials say there will be very little money left in the fund once the program expires Friday.
Approximately 4,900 cases have been approved.
The program was extended in 2010 in part because an estimated $24 million had yet to be spent.