Mary MacKillop is set to become Australia's first saint after Pope Benedict XVI approved her second miracle on Saturday.
Mother Mary's canonisation will be set down for approval at a Solemn Consistory, a meeting expected in March.
There, the decision to canonise will be formally made and the date of the canonisation ceremony in Rome will be announced by the Pope.
Australian Ambassador to the Holy See Tim Fischer said on Saturday that Sister Maria Casey, who has been campaigning for Mother Mary's canonisation, said Pope Benedict XVI had "confirmed that the cure of a lady from inoperable lung cancer is a true miracle".
Mr Fischer said Mother Mary, who died in 1909, had cleared the last hurdle but one - the Solemn Consistory - with "flying colours".
"It is a great salute to a superb Australian who has done so much to help so many," Mr Fischer said.
"As Minister Stephen Smith has said, it is a joyful occasion for Australia's catholic community and a landmark event in Australia's history."
Before someone can be canonised, the Catholic church has to recognise that they performed two miracles.
The Vatican confirmed Mother Mary's first miracle in 1971, saying it was believed she had cured a woman of leukaemia in the 1950s.
She was beatified by Pope John Paul II in 1995.
Sister Maria was thrilled with Saturday's developments.
"It's wonderful news and a great day for the achievements of Mary MacKillop as a wonderful holy woman," she told AAP.
"It's something Australians both Catholic and non-Catholic have been waiting for and I think judging by the reaction and expectation and level of interest there will be a great excitement.
"It means Australians have someone of their own (as a saint) - a very ordinary woman who is recognised as being holy and a great pioneer."
The miracle approved on Saturday involved the healing of a woman with cancer after praying to Mother Mary during the mid-1990s and had to be assessed scientifically and theologically and then decreed by the Vatican.
Mother Mary was born in 1842 and founded the Catholic order of the Sisters of St Joseph after setting up a school in Penola, South Australia, in 1866.
She spent her life educating and caring for people from all walks of life.
She maintained her faith and dedication to helping people, despite a backlash from church leaders and suffering ill health for many years, up until her death in Sydney.
Since then, there has been a lengthy campaign to make her Australia's first saint.
Mr Fischer said: "From the school students of Penola to the prime minister, there will be celebrations."
Mary MacKillop Heritage Centre chief executive Garry McLean said at long last Australia has a saint.
"She was an extraordinary Australia, born here in Melbourne, and she has achieved what no other Australian has done," he said.
"It's fantastic for the country to have its first saint and fantastic for Melbourne because she is a Melbourne girl."
Sister Anne Derwin, Congregational Leader of The Sisters of Saint Joseph, said in a statement: "Today is a special day not only for the Sisters but also for Australia and the universal Church. It is a day to acknowledge Mary who is not only truly saintly but also one of Australia's true heroes.
"Mary was a woman truly ahead of her time; she was bold and tenacious and let nothing stand in the way of her care for others. Her strength, humour and egalitarian vision have important relevance in today's busy and complex times.
"The universal recognition of Mary's holiness for the Church and the whole world will inspire future generations both in Australia and throughout the world."
- AAP
MacKillop to become Australia's first saint
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