Justice Minister Lena Metlege Diab said the amendment to the Public Inquiries Act would ensure any statement or testimony given by witnesses would not be used against them in a trial or court proceeding.
Diab said the change follows a request by the group working on the terms of reference for the inquiry into the former Halifax orphanage.
The Justice Department said the change is similar to provisions in legislation in several provinces and territories including British Columbia, Saskatchewan and Ontario.
Tony Smith, of the inquiry design group, said the change would allow people to speak more freely during the inquiry. He said some potential witnesses had expressed reservations about testifying.
"A lot of us former residents did have problems with the law on different issues," said Smith. "We want to be able to have them speak in a way that is less harm for them."
Smith said the design group would be ready to publicly release details of the inquiry's terms of reference within a month or more and expects the inquiry would start sometime in the fall.
But with the spring session of the legislature drawing to a close, Diab said it's likely the bill won't be passed until the fall session of the legislature.
Jennifer Llewellyn, the design group's legal adviser, said testimony would have to wait for the legislation, although ramp-up work to get the inquiry ready could begin.
"We couldn't start the sort of hearings that would put people in the position of participating first thing in the fall until this is passed," she said.
Last fall, Premier Stephen McNeil formally apologized for the abuse suffered by residents of the home and promised a public inquiry this year.
Former residents allege that they were subjected to physical, psychological and sexual abuse over several decades up until the 1980s.