The Legislative and Constitutional Affairs Committee has now found the Federal Government's power to override laws passed in the ACT and Northern Territory is "inappropriate and unwarranted".
It recommends the Senate pass the legislation with minor changes.
The report also says granting the territories more power will not mean same sex marriage and euthanasia laws will automatically be introduced.
"Territorians are not just being denied their democratic rights, they're being treated as some sort of second-rate Australians."
ACT Chief Minister Jon Stanhope has welcomed the committee's report, but says he doubts the laws will pass because the debate has become confused.
"It seems to me that the debate has been contaminated from the outset by the determination of some to confuse our democratic rights.
ACT Senator Gary Humphries and a certain group within the parliament have particular concerns about the rights and wrongs of euthanasia, and gay and lesbian marriage or relationships, they are opposing this bill.
The passing of this bill does not automatically mean euthanasia, and gay and lesbian marriage will be legal in the ACT.
This will only happen if the people of the ACT agree to make them legal, there is no guarantee that will ever happen.
A FACE FROM THE PAST
WHY IS IT THAT ANY TIME A BILL OF RIGHTS OF ANY DESCRIPTION IS DISCUSSED
WE HAVE RIGHT LEANING POLITICIANS OPPOSING?
WHY CAN'T WE HAVE THE SAME RIGHTS AS OTHER AUSTRALIANS!