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The leg-spinner, who played 10 first class matches in Pakistan, was not eligible to play for Australia until August 18, near the end of the Ashes series, but a passport may now be provided to him within a month if the legislation receives bipartisan support next week.
The first Test begins at Trent Bridge, Nottingham, on July 10.
Australia has just one spinner, Nathan Lyon, in its 16-man Ashes squad and chairman of selectors John Inverarity has always left the door open for Fawad to be included if he received an Australian passport in time.
Fawad claimed 16 wickets in three Sheffield Shield matches for Victoria at the end of last season.
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This is not the first time the Immigration Minister has intervened on Fawad’s behalf.
In 2010 he arrived in Australia on a short stay visa to play cricket in Yoogali, near Griffith in NSW, and applied for refugee status.
Fawad claimed he had been threatened by extremists for working with an NGO to help educate women in his local region on Pakistan’s North West Frontier, which adjoins the Afghan border.
His initial application was rejected but strong lobbying by Cricket Australia had the decision overturned by the minister late last year.
O'Connor's bill will enable citizenship to be fast-tracked in special circumstances, claiming that changes to the act in 2009, which allowed two European-raised tennis players and a Russian speed-skater to represent Australia, "do not adequately cover the field".
While O'Connor didn't mention Ahmed by name, he referred to “international cricket competitions” and adds Cricket Australia to the list of organisations that can support an application.
"The proposed amendments will give the minister the discretion to provide a pathway to citizenship for a very small number of people in very exceptional circumstances where their becoming a citizen would be of benefit to Australia,” O’Connor said.
Cricket Australia is delighted with the outcome so far as it continues to promote diversity in Australian cricket, with the possibility of two Pakistan born players, Fawad and Usman Khawaja, contesting the Ashes.
It was revealed on Thursday that Blacktown-born fast bowler Gurinder Sandhu, 19, the first cricketer of Indian heritage ever to play for NSW, will be awarded a special marketing contract by CA.
"This is the first stage of a process that will enable Fawad Ahmed to become an Australian citizen,” a CA spokesman said.
"This is pleasing news but as it stands Fawad is not currently eligible for Australian selection.
"This sends a very clear message to migrants and residents of Australia that in the fullness of time if you train hard enough you can possibly become eligible for Australian teams."
Read more: Immigration minster Brendan O'Connor becomes Australia's sixth selector as Fawad Ahmed eyes Ashes | Australia Cricket, Live Cricket, Cricket Scores | Fox Sports