The change means the minimum benefit to cover lost earnings for reservists almost doubles from $24,300 to more than $42,000 a year. The military estimates about 200 part-time reservists will benefit when the change goes into effect next month and will cost about $24 million over the next five years.
Veterans Affairs Minister Erin O'Toole, who announced the change in Halifax, said benefits are being extended to give reservist veterans equal and fair treatment.
"These men and women serve alongside our regular force members and they do so with distinction," he said.
"They are critical to Canada's own defence and critical to Canada's interests abroad, and they bear the same price."
O'Toole said Canada sent 27,000 reservists to Afghanistan and 14 of them were killed during the mission.
Defence Minister Jason Kenney also announced the change in Calgary, saying Cpl. Nathan Cirillo's death in Ottawa last October pushed the government into action.
Kenney said a special exemption was made for Cirillo's family after he was shot dead while serving as an honour guard at the National War Memorial, but under the old rules they would not have qualified for the benefits.
"I think that really brought to our attention the gap that existed and has always existed in the benefits for vets so when that happened I think it sent us a message that we had to fix this right away," said Kenney.
"We shouldn't have to make an exception. That support should have been automatic, it should have been part of the policy and it will now and forever (be) when people like him make that sacrifice."
A veterans' advocate expressed his shock at the idea that it took Cirillo's death in Ottawa, and not the combat deaths of part-time soldiers in Afghanistan, to move the broader issue of equality to the political forefront.
"Were the sacrifices of those who came before (Cpl. Cirillo) somehow not worthy?" asked Mike Blais, president of Canadian Veterans Advocacy. He said the issue of unequal treatment has been a long-standing and has been the subject of numerous reports both in Parliament and at Veterans Affairs.
The new benefit regime includes reserve force veterans who are enrolled in the vocational rehabilitation program, including those who are getting benefits from the Defence Department's service income insurance plan, O'Toole said. It also extends to survivors of reservists who died as a result of their military service.
The benefit will increase according to pay with each rank above corporal.
The change fills a gap first identified by Veterans Affairs in 2006.
Scott Maxwell, executive director of Wounded Warriors Canada, said the change is about recognizing all veterans even though the government is sometimes slow to act.
"We're OK with that so long as they are listening and they are willing to act," said Maxwell.
Veterans ombudsman Guy Parent said the increased payment is about the debt owed by Canadians to those who serve in uniform.
"It doesn't matter whether you are a reserve, regular force, where you serve or how you serve," said Parent. "The debt should be repaid and I think today we made a step closer towards meeting that commitment."
The unequal treatment of reservists has been a sensitive topic for the Conservatives, who have put a politically charged overhaul of the reserve forces on hold. National Defence was supposed to have delivered a new structure for the part-time, volunteer force by this spring's budget, but it likely won't be done until after the election, scheduled for October.
— With files from Bill Graveland in Calgary and Murray Brewster in Ottawa.
Also on HuffPost