Hundreds of thousands of New Zealanders living in Australia will be able to claim citizenship as the Albanese government continues its shake-up of the migration system.

The announcement, which coincides with the 50th anniversary of the Trans-Tasman Travel Arrangement, could see roughly 400,000 Kiwis of the estimated 700,000 living in Australia eligible for citizenship, according to the Australian government.

The changes overturn a 2001 decision by John Howard's coalition government to strip New Zealanders of citizenship access, forcing them onto special category or temporary residency visas.

They mean that, from July, previous hurdles to citizenship including income and health tests will be removed, allowing New Zealanders to become citizens after four years of living in Australia.

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