In a ruling released Thursday, Judge Arthur LeBlanc sanctioned the proceeding but said he wanted more information from the plaintiffs on their litigation plan and a slight amendment to the statement of claim.
Ray Wagner, a lawyer representing the class, praised the decision and said he will provide the judge with the required information before the end of March.
"We're very pleased that he spent as much time and effort and understood the issues and addressed them and came to the conclusion that he did," he said of LeBlanc's decision.
The case may not proceed through the courts if the province and the class can work out a settlement, which the newly elected Liberal government has indicated it wants to try to accomplish.
Premier Stephen McNeil has not said how much the province is willing to provide in any settlement, but says he is willing to hold an inquiry into the alleged abuse at the home.
Wagner said talks were talking place with the Justice Department and qualified them as "positive and fruitful."
"We're planning some more activity in terms of trying to bring it to a successful resolution through negotiations," he said. "I'm quite optimistic that we're going to be able to achieve a resolution that will treat people fairly."
About 150 former residents of the orphanage allege they were sexually, physically and psychologically abused by staff over a 50-year period up until the 1980s.
LeBlanc said in his decision that there were enough common issues for the class to proceed.
"The question of whether the province breached legal obligations respecting supervision of the residents or the home is a necessary and substantial part of each class member's claim," he wrote.
McNeil announced last month that his government would try to settle the suit, something his NDP predecessor fought in the courts before being defeated in October's provincial election.
The allegations in the class-action have not been tested in court and previously lawyers for the government have argued that some of them are based on speculation or hearsay.
Tony Smith, who is part of the class-action, said a satisfactory settlement would be preferable to what would likely be a lengthy court process.
In April, the Home for Colored Children agreed to pay a $5-million settlement to 140 plaintiffs after a class-action lawsuit against it was launched two years ago.