Penalties for breaching protection orders would be increased and `economic abuse' would be recognised as a form of psychological abuse.
The reforms are expected to save $70 million over four years.
A review ordered by then justice minister Simon Power last year found the court's costs increased by 63 per cent in the five years to 2010.
A consultation paper said the system was "not financially sustainable'' and questioned whether the state should try to keep marriages together.
"There is also a duty under the Family Proceedings Act for judges, lawyers and counsellors to promote reconciliation for separating couples and, if that is not possible, conciliation,'' it said.
"The question was raised whether the Family Court should continue to be involved in promoting reconciliation, or whether it is more appropriate for the state to focus on conciliation and assisting families to resolve their disputes.''
In practice, this may mean dropping the free counselling service and expanding mediation. In Australia, the federal Government funds 65 ``family relationship centres'' which primarily provide mediation to help separating couples resolve disputes.
A survey by the Association of Counsellors found that 53 per cent of 1500 couples who sought court-funded counselling voluntarily, and 31 per cent of 300 couples who were directed into counselling by the court, "presented with the issue of possible separation but were helped to instead resolve their relationship issues and subsequently stayed together as a couple/family''.
The chairman of the Law Society's Family Law Section, Garry Collin, said today it would study the proposed changes in detail and assess their likely impact on all parties who use the Family Courts.
"Maintaining a workable and efficient Family Court system which enables families to resolve their disputes is our key concern.''
Mr Collin said the minister had announced legislation to implement the changes would be introduced later this year and the Law Society would be making submissions on this.
But Labour's justice spokesman Charles Chauvel said a fee of $897 to access the new Family Dispute Resolution service would be a huge barrier in obtaining justice for many families caught up in unhappy domestic situations.
"Judith Collins has privatised family dispute resolution services today, and priced them out of the reach of many Kiwi families,'' he said in a statement.
"Many families will simply not be able to afford a new $900 fee to access what was previously a free service in recognition of the importance of ensuring parents of children in unhappy domestic situations are not deterred from getting assistance to resolve their differences promptly.''
