Holders of Flight Examiner Ratings will be indemnified by the federal government from 1 September this year.
The announcement was made by Deputy Prime Minister and Minister for Infrastructure and Transport Michael McCormack on Monday.
The announcement followed a policy review and public consultation by the Department of Infrastructure, Regional Development and Cities earlier this year.
"This approach will help retain experienced industry flight testing personnel working in regional areas," McCormack said.
"I know this has been an issue that industry have been keen to see a resolution and I am glad that today we can announce the good news."
Under the new CASR Part 61, the CASA delegation Approved Testing Officer (ATO) was abolished and the new Flight Examiner Rating established. However, holders of the new rating were not CASA delegates and therefore not covered under the government's insurance.
As a result, many ATOs did not transition to the new rating, forcing CASA to extend the ATO delegation temporarily.
The general aviation industry has greeted the news with enthusiastic approval.