From April, family members caring for disabled relatives will receive an average pay boost of around $2000 per year.
The announcement is among new Government changes to Funded Family Care, including expanded carer eligibility for young people.
For 45 years, John Forman and his wife have cared for twins Tim and Holly.
"Holly, who is far more dependent, she can't do anything independently for herself," he says.
Holly and Tim live with a rare genetic condition that causes neurological and physical problems.
The couple have a part-time carer to help them, but everything else is done by John and his wife. For this, John gets paid just 13 hours a week minimum wage.
"The current regime, it was just mean-spirited and nasty," he says. "There is no other way to describe it."
Last year, the Government signalled changes to the Funded Family Care, expanding eligibility to include spouses and partners and lifting pay rates from minimum wage up to a maximum of $25.50 an hour.
On Sunday, it announced those changes will mean an annual pay boost of $2200 for family carers. It has also further extended eligibility to carers aged 16 to 18 years of age.
"We know there are some 16-year-olds and 17-year-olds out there that are looking after families with disabilities and if they are, we are saying they should be eligible to be paid," Associate Minister of Education and Health Jenny Salesa says.
"It's a shame that it had to be such a long hard battle but it's great that we have got another significant step forward," Forman says.
The Government says the changes will take effect in April, benefiting an additional 660 families and costing $32 million over the next four years.