Five days later, he ended his life. Ten days after he died, the department transferred $4551 to Mr Bird's account.

The whole case, his family said, was bungled by the department. And on Tuesday, Veterans Affairs Minister Dan Tehan frankly admitted the system had let the young veteran down as he used a speech to Parliament to apologise to Mr Bird's family.

Mr Bird, a private with the Townsville-based 1RAR and a veteran of Afghanistan, killed himself on June 27 at the age of 32.

His case has come to epitomise what many have long complained was an overly bureaucratic, impersonal and adversarial approach to veterans' compensation - and which the government has vowed will change.

Mr Tehan announced he had accepted a series of recommendations from an inquiry into Mr Bird's suicide and by a Senate committee.

At the heart of Mr Bird's case was the department's rule that mental health conditions had to be "permanent and stable" before compensation would be granted. Medical assessments had deemed that Mr Bird's conditions, which included post-traumatic stress disorder, depression and alcohol abuse, did not meet this threshold.

Mr Tehan in his speech singled out this obstacle as one issue that "needs to be addressed". The inquiry into Mr Bird's death had recommended that Mr Tehan consider "the provision of more timely compensation payment" by linking it to the current assessment of any permanent impairment related to military service rather than waiting for that impairment to "stabilise".

Mr Tehan acknowledged the young man had been "struggling with all this" when he decided to end his life.

In some cases the department did not follow its own policy, practice or even the legislation. In some respects, Mr Tehan said, they just didn't have the services Mr Bird needed.

Ultimately the system "let Jesse down as he was unable to get financial assistance when he needed it".

Mr Bird's family said in a submission to a Senate inquiry last year that he had joined the army in 2007 as an athletic, charismatic and confident young man. But he "did not return the same person" from his 2009 deployment to Afghanistan, where he was nearly shot by insurgents and was in close proximity to booby trap bomb blasts, one of which killed his friend Benjamin Ranaudo, 22.

After discharging in 2012 and struggling to hold down a job or maintain a relationship, he had spent two years being "stonewalled" by the department.

Mr Tehan accepted 19 recommendations from the Bird inquiry, which included calls for department correspondence to be "accurate, easy to understand and appropriate in tone" and for any denial of claims to be done first with a phone call rather than in writing.

The department should also proactively follow up veterans who seemed to be struggling with applications for compensation and improve their case management.

Mr Tehan unveiled $31 million to fund some of the changes and announced a Productivity Commission review into the notoriously complicated veterans legislation as well as an Audit Office probe into efficiency of veterans services - both recommendations of the recent Senate inquiry into military suicide.

If you are troubled by this report or experiencing a personal crisis, you can call Lifeline 131 114 or beyondblue 1300 224 636 or visit lifeline.org.au or beyondblue.org.au