The legislation aims to modernize abortion laws in place since 1977 and proposes that a woman should have access to abortion until 20 weeks of pregnancy.
After 20 weeks, a pregnant woman would require one heath practitioner to reasonably believe the abortion is appropriate with regard to the woman's physical and mental health, and well-being, the government said in a statement.
"Abortion is the only medical procedure that is still a crime in New Zealand. It's time for this to change," Justice Minister Andrew Little said in a statement.
"Safe abortion should be treated and regulated as a health issue; a woman has the right to choose what happens to her body," he added.
Currently abortion in New Zealand is an offense under the Crimes Act, and a woman can only legally get an abortion if two doctors certify that continuing the pregnancy would result in danger to her mental or physical health.
The grounds on which abortion can be approved by the doctors are narrow and do not include reasons such as rape or the inability to support a child, activists have said.
Prime Minister Jacinda Ardern promised to change the laws after winning a 2017 election, but the plans were delayed as lawmakers argued over the bill.
The abortion rights group ALRANZ said the proposed bill was a "mixed bag".
"It's not as good as it could have been, but it's so much better than the status quo. We have to give the government props for that," said ALRANZ national president Terry Bellamak, who questioned the 20-week limit.
"There are scans that happen around 20 weeks and this gives people little time to consider those results," he said.
The legislation would allow for the creation of safe areas around specific abortion facilities to protect women from intimidation or harassment from anti-abortion activists.
Medical practitioners who object to providing abortion services on the grounds of conscience must inform the pregnant woman so that she can obtain services elsewhere, the bill said.
New Zealand is the latest country to liberalize abortion laws. South Korea's high court overturned a ban on abortion in April, while Ireland legalized abortion in a referendum last year.However, in the United States some conservative-leaning states have taken action to curb abortion rights.