The Coroners Amendment Bill would still require the coroner to hold an inquiry into deaths in custody and care, and the coroner could decide whether an inquest was warranted.
The Chief Coroner, Judge Deborah Marshall, has welcomed coroners having that flexibility. However, Ms Aldred said that, in her experience, coronial inquiries that took place without an inquest generally involved carefully written reports, often scrutinised by lawyers.
These were a poor substitute for the oral testimony and cross-examination that occurred during an inquest - a public hearing usually held in a courtroom that allows the coroner to ask experts and witnesses to give evidence and be questioned.
"It is the thin edge of the wedge when we are basically inviting coroners to look at written information and take the opportunity not to hold an inquest ... it's only when people are put on the stand and questioned when the facts, in my view, come out."
The proposed changes to the Coroners Act outline that when deciding whether to hold an inquest coroners must consider whether "the negligence or misconduct of a person other than the dead person appears to have contributed to the dead person's death".
Ms Aldred, who made her comments at Parliament to a justice and electoral committee, said that wording unjustifiably narrowed the focus and excluded where deaths resulted from systemic failure.
Following Ms Aldred's submission, Dr Mark Peterson, chairman of the NZ Medical Association, said the organisation held similar concerns.
Labour's justice spokeswoman, Jacinda Ardern, said investigations into the suicide of children in CYF care - which could reveal information that could prevent future tragedies - could be affected by the law change.
Justice Minister Amy Adams said that between 2007-13 there were about 80 deaths in official custody or care for which the current act required an inquest. In nearly 60 per cent of these inquests, the cause of death was found to be natural causes.
"With an ageing prison population, the number of inquests into deaths in official custody or care may increase in the future. An inquest is resource-intensive and time-consuming. One of the main goals of the Coroners Amendment Bill is to reduce delays in the coronial process and to ensure coronial resources are directed to where they are most needed."