Immunity for Saleh and his allies was a key part of a November power deal brokered by Yemen's powerful Gulf neighbors, under which he is to step down.
But the extent of that immunity has been a contentious issue in Yemen, which has been in a state of turmoil for over a year, with numerous factions demanding that he leave office. Hundreds have been killed in government crackdowns on demonstrators.
A new wave of protests broke out earlier last week when it emerged that the draft law applied to all crimes by all members of Saleh's government during his entire 33-year reign.
Responding to the public outcry, Yemen's vice president, opposition parties and members of Saleh's party agreed to limit the sweeping immunity.
The statement offered "immunity from criminal prosecution for those who worked for the president in the security, military or civil capacity in connection with politically-motivated acts."
It said that the immunity does not apply if there was proof of any "acts of terrorism."
Saleh himself would still enjoy complete immunity, the statement said.
The president has not yet stepped down, despite having signed the November deal to do so.
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