Denyer pleaded guilty to stabbing and strangling Elizabeth Stevens, 18, Debbie Fream, 22, and Natalie Russell, 17, over a seven-week period in the Melbourne bayside suburb of Frankston in 1993.
He was sentenced to life in jail with no parole, but that was reduced on appeal in 1994 to a non-parole period of 30 years.
The Adult Parole Board rejected Denyer's parole application in May but the families of victims feared he would make further attempts, lobbying for legislation to keep him locked up indefinitely.
The state government initially did not want to name Denyer in its reforms over concerns it could prompt the convicted murderer to mount a High Court challenge.
But it backflipped after speaking to the families and receiving advice from the solicitor-general  a challenge was unlikely to be successful.
The legislation, introduced to parliament on Wednesday, stipulates Denyer cannot be released from prison unless he is incapacitated or terminally ill.
It puts him in the same category as Hoddle Street shooter Julian Knight and Russell Street bomber Craig Minogue.
The parents of Ms Russell said they were elated after the government's change of heart.
"A tremendous weight has been lifted off our shoulders," Brian and Carmel Russell said in a statement.
"Not only will Denyer not see the light of day again, this legislation looks at the whole parole system.
"There are some good changes which will benefit people who have been in our situation."
Attorney-General Jaclyn Symes, who has met Ms Russell's family three times, defended the government not supporting a coalition bill in June that would have used similar language against Denyer.
Although she does not regret Labor voting down the bill, Ms Symes conceded she should have met Ms Russell's family sooner.
"What I was concerned about was meeting with a family prior to the parole decision," she told reporters at parliament.
"I didn't want to seen to be inappropriately influencing an independent body."
The wider reforms will give the parole board powers to stop murderers, child killers and serious sexual offenders applying for release for up to 10 years after serving their non-parole period.
Prisoners serving a life sentence would also be banned from reapplying for parole after a rejected application.
Ms Symes wants parliament to pass the legislation before the end of the year.
Opposition Leader John Pesutto said the coalition would take the time to read through the bill but flagged it would likely support the changes, ensuring its passage.
In its 2022/23 annual report, tabled in parliament on Wednesday, the parole board revealed the number of parole applications it received over the past year jumped from 1220 to 1312.
But fewer prisoners were granted parole, with successful applications falling from 673 to 619.
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