OTTAWA - One injured soldier's lawsuit has changed the way the government calculates benefits for veterans.

Veterans Affairs Minister Steven Blaney announced Wednesday his department will immediately end deductions of veterans' disability pensions when calculating their Earnings Loss and Canadian Forces Income Support benefits.

The adjustment will cost the government almost $178 million over five years, Blaney said, noting further changes are on the way, including a similar adjustment to the calculation of War Veterans' Allowance benefit.

It was losing a five-year legal battle that spurred the government into making the changes.

A serviceman who'd been forced out of the military in 2003 due to injury launched a class-action lawsuit against the Department of National Defence after he began losing his disability payments.

More than 4,500 Canadian Forces members joined the suit, which was launched in 2007.

In July, the feds decided not to appeal a Federal Court ruling that they were wrong to claw back veterans' disability benefits.

Mike Blais, who heads Canadian Veterans Advocacy, said Wednesday's announcement was positive for veterans, but more work needs to be done on the file.

"There are still issues in the sense retroactivity hasn't been decided," he said, noting the government is still negotiating how far back payments on the clawbacks should go.

Blaney's spokesman, Jean-Christophe de le Rue, said the government has not yet made any decisions on retroactive payments.  

Royal Canadian Legion president Gordon Moore said his organization supports the changes made so far and hopes Veterans Affairs "will continue to review the income programs of our disabled veterans, whose injuries are attributable to their service, to ensure fairness and equity."

According to one estimate, it could cost more than $300 million to retroactively pay back the reductions to the veterans.