State Planning Minister John Day announced the changes on Tuesday, dropping the opt-in threshold from $3 million to $2 million and extending the mandatory limit from $7 million to $10 million.
Applications to the specialist Development Assessment Panel grew by more than 40 per cent between 2011 and 2014, with more than 321 applications received last financial year.
The panel approved more than 90 per cent of the applications submitted in 2013/14, not including those deferred.
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READ NOWMr Day said the modified threshold would provide developers more flexibility and create a more transparent system.
"At a community level, the reduction of the opt-in threshold recognises that some smaller priced developments may benefit from being reviewed by an independent panel," Mr Day said.
The changes have been met with some resistance, with local government representatives concerned the changes would strip councils of a final say on developments in their communities.
City of Stirling planning and development director Ross Povey said the City did not support the changes to the threshold.
"The assessment and advertising processes, which are conducted by the City, will remain the same, the key difference is where the JDAP becomes the decision maker rather than the council," he said.
"The City of Stirling does not support development assessment panels and has previously advised the Government that decision-making on development applications should be returned to local government."
Department of Planning acting director general David MacLennan said the increase in panel applications would not result in an increase in waiting times, while application fees would offset any incurred costs.
"The Government's reform agenda aims to improve the planning system and approvals process by providing more transparency, consistency and reliability in decision-making on complex development applications," Mr MacLennan said.
Urban Development Institute of Australia chief executive Debra Goostrey welcomed the changes, which she said were long sought by the industry.
"This is not about choosing one approval process above another across the board, rather it is about increasing the choices that are available to each proponent so they can make decisions appropriate to their circumstances," she said.
The City of Stirling assessed 10 $2 to 2.9 million developments last financial year that would qualify for an optional panel assessment under the latest changes.