The initiative's aim is to lure talented cricketers like Sydney-born opening batsman Sam Robson, currently the leading run-scorer in the top tier of the County Championship in England, back to Australian domestic cricket.
Middlesex batsman Robson, who holds a British passport owing to his Nottingham-born mother, has represented Australia at under-19 level but is also eligible to represent England in the future.
"The Board has endorsed changes to the definition of an Overseas Player for Australian domestic competitions," Cricket Australia (CA) said in a statement on Friday.
"The changes are designed to allow Australian players who have dual passports to play in more than one... domestic competition."
With the current Australian team's calamitous performance in the ongoing Ashes series, where Michael Clarke's men have passed 300 just once in the last eight innings, players like Robson would give the selectors more options in the future.
The current rules prevent cricketers born in Australia or holding a valid Australian passport from playing in the country as overseas players.
The 24-year-old Robson, who has scored 993 runs for Middlesex at an average of more than 62 this season, has been unable to represent New South Wales as an overseas player because he was born in Australia.
"CA wants as many quality cricketers playing in its domestic competitions as possible," the cricket board added.
"These changes will allow Australian players with dual passports to play first-class cricket in more than one country.
"A number of Australian-qualified cricketers currently playing in ECB (the English cricket board) competitions in particular are doing so as a local player, meaning if they play in Australia during the summer they need to do so as an overseas player to retain their ECB eligibility."