Lawyers will still be able to inform on their own clients to police following the Lawyer X scandal, despite 11th hour changes to incoming Victorian laws.
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The contentious Human Source Management Bill passed the upper house 21-14 with the support of the Greens, Legalise Cannabis Party and Animal Justice Party after the government agreed to amendments.
The amended bill will return to the Lower house to be rubber stamped before the reforms pass into law.
It acts on 25 recommendations from the Royal Commission into the Management of Police Informants, which investigated Victoria Police's handling of former gangland lawyer-turned-police informant Nicola Gobbo.
Commissioner Margaret McMurdo found the use of Ms Gobbo as a secret informer was a "systemic failure" and police should have disclosed her status as a human source.
The changes will clarify that the Independent Broad-based Anti-corruption Commission has jurisdiction to examine contraventions of the laws and force Victoria Police to acquire Supreme Court authorisation before a lawyer is registered as a human source.
In the "rare circumstances" police are allowed to register those with access to privileged information, such as lawyers, they will be subject to multiple stages of independent oversight, state Attorney-General Jaclyn Symes said.
They will report regularly to the attorney-general and parliament and be required to consider legal advice, she said.
"Victorians deserve nothing less to ensure what happened with Gobbo cannot happen again," Ms Symes said.
"This bill does not change lawyers' existing obligations but instead gives Victoria Police a clear legislative framework on what to do when they get highly sensitive information instead of relying on internal policies."
Ms Symes said she was contacted by a lawyer on Tuesday flagging plans to move to another state because they didn't want clients thinking they would "snitch" on them.
"I was like 'it's actually a lot easier to be a police informant as a lawyer in another state rather than Victoria' ... that's a fact," she told the upper house.
Under the bill, lawyers will only be able to provide information, subject to client legal privilege, for a maximum of seven days, after which their registration as a human source must be deactivated.
Police will be banned from "tasking" a lawyer who is registered as a human source when officers want information subject to client legal privilege.
The amendments also ensure children are accompanied by adults when registered or used as human sources and interacting with police and ban officers from "requesting, procuring or inducing" children to become informants.
The changes provide the necessary checks and balances to help prevent another Lawyer X scandal, Victorian Greens justice spokeswoman Katherine Copsey said.
"This includes stronger oversight of police activities in relation to their use of human sources, as well as increased protections for children," she said.
Law Institute of Victoria president Tania Wolff acknowledged some improvements had been made to the bill but said the body's principal objection had not been addressed.
"We remain fundamentally opposed to a regime that allows lawyers to inform on their clients," she said.
"The fallout from Nicola Gobbo's actions and its ongoing costs, should, at a bare minimum, have taught us that."
Lawyers should never inform on their clients because it undermines a basic principle of the justice system, Liberty Victoria argued.
Australian Associated Press
