The fields of rational drug design and protein engineering benefit from accurate free energy calculations based on molecular dynamics simulations. A thermodynamic integration scheme is often used to calculate changes in the free energy of a system by integrating the change of the system's Hamiltonian with respect to a coupling parameter. These methods exploit nonphysical pathways over thermodynamic cycles involving particle introduction and annihilation. Such alchemical transitions require the modification of the classical nonbonded potential energy terms by applying soft-core potential functions to avoid singularity points. In this work, we propose a novel formulation for a soft-core potential to be applied in nonequilibrium free energy calculations that alleviates singularities, numerical instabilities, and additional minima in the potential energy for all combinations of nonbonded interactions at all intermediate alchemical states. The method was validated by application to (a) the free energy calculations of a closed thermodynamic cycle, (b) the mutation influence on protein thermostability, (c) calculations of small ligand solvation free energies, and (d) the estimation of binding free energies of trypsin inhibitors. The results show that the novel soft-core function provides a robust and accurate general purpose solution to alchemical free energy calculations.