Treasurer Joe Hockey is confident changes to allow increased foreign investment in Qantas will pass parliament on Wednesday.

The federal government has abandoned plans for unlimited foreign ownership of the national carrier because it cannot get the changes through the Senate.

It has instead accepted a Labor proposal to increase the caps for foreign investment to 49 per cent but maintain the airline as majority Australian-owned.

Mr Hockey said it was clear it could not succeed with its original plan.

“An alternative was proposed by the Labor Party and we’re prepared to accept that to give some stability to the rules governing the ownership of Qantas,” he told ABC radio.

“I’m confident that will pass today.”

Opposition Leader Bill Shorten on Tuesday welcomed news that the government had adopted a Labor proposal that foreign interests not hold more than a 49 per cent stake in the national carrier.

The coalition moved legislation to open investment after complaints from the airline about the unfair Qantas Sale Act which limits at 35 per cent a combined holding by foreign airlines and 25 per cent by any single foreign investor.

The Labor proposal removes the lower caps, thus allowing greater but not majority foreign investment.

“Qantas should remain majority Australian-owned and I’m pleased the Abbott government has given in and accepted Labor’s proposal,” Mr Shorten said.

The government was forced to compromise on its plan after failing to find upper house support for the legislation, Fairfax reports.