Under the new law, the decision will be up to the woman, in consultation with her doctor, until 20 weeks' pregnant.
After that, the person performing the procedure will have to "reasonably believe the abortion is appropriate with regard to the pregnant woman's physical and mental health, and wellbeing".
Medical practitioners who didn't comply would face consequences from their medical bodies, rather than under the Crimes Act, Little told reporters.
"Abortion is the only medical procedure that is still a crime in New Zealand. It's time for this to change," Little said.
"Safe abortion should be treated and regulated as a health issue; a woman has the right to choose what happens to her body."
The bill would also no longer be a crime if women induced their own miscarriages, he said.
The bill will be voted on in a conscience vote in Parliament, rather than along party lines.
It will have its first reading in the House on Thursday.
Little said he expected the law to pass that first hurdle before a special select committee was established, although he was not clear on how many MPs were expected to vote for it.
The bill would also allow for the creation of 150-metre safe zones around specific clinics where people had been harassed by protesters.
It would prevent people from handing out pamphlets or approaching women going inside.
"We know that there are some places in New Zealand where women going to get an abortion are being harassed and intimated, are being confronted by anti-abortion protesters with their literature. It is simply inappropriate to do that," Little said.
"I've seen enough to suggest that we have that up our sleeve, on a very localised basis."
Other changes in the bill include:
• Ensure practitioners who object must inform pregnant women about their objection, and that the woman can obtain the services elsewhere
• Allowing women to self-refer to an abortion service, bypassing doctors.
• Ensuring health practitioners advise women about counselling services, but participation won't be mandatory requirement
Under the proposed law it will still be illegal for an unqualified person to try to perform an abortion and causing the death of an unborn child by harming a pregnant woman will remain an offence.
The Law Commission submitted three reform options for the Government to consider in October, but the legislation has been repeatedly held-up, including by negotiations with NZ First.
The options included having no statutory test to make sure the abortion was appropriate at any point; taking abortion out of the Crimes Act but having a statutory test; or only having a test for later-term abortions, after 22 weeks.
Reform campaigners had been calling for the first option and have described today's announcement as 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... Overall, this is a huge step forward and quite an achievement," Abortion Law Reform Association of NZ president Terry Bellamak said.
"But why the 20-week limit? There are scans that happen around 20 weeks and this gives people little time to consider those results."
The safe zone policy was also too reactive, she said.
"Does this mean providers and patients must suffer actual harassment, intimidation, or injury before they can apply to the minister for a safe area? That might put health practitioners off providing abortion care," she said.
Family Planning also said it was disappointed there was still a legal test.
"The proposed approach isn't what the broader health community, including Family Planning, recommended and is really a missed opportunity to put all women front and centre of the process," chief executive Jackie Edmond said.
"Still, Family Planning is pleased that the proposed model will remove abortion from the Crimes Act and allow 99 per cent of women seeking an abortion to make their own decision in consultation with a health provider."
There were about 13,000 abortions performed in New Zealand last year, according to Statistics New Zealand.
Only 57 of those took place after 20 weeks' pregnancy.
