The Melbourne-born Mother Mary MacKillop, who died in 1909, was a strong-willed, passionate believer in educating the poor.
The order she founded, the Sisters of St. Joseph, has built dozens of schools across the Australian Outback.
MacKillop, whose parents immigrated to Australia from Scotland, will be canonized in Rome on Oct. 17, the pope announced at the Vatican, speaking in Latin.
The church has to recognize that a person has performed two miracles before it confers sainthood.
The first step for MacKillop came in 1995, when Pope John Paul II beatified her after she was said to have cured a woman of terminal leukemia.
In December, Benedict credited her with curing a woman of cancer.
The woman, identified as Kathleen Evans, was reported to have told Australia's ABC News last month that she was cured of inoperable cancer in her lungs and brain after praying to MacKillop, the BBC said.
"I do believe in miracles," Evans was quoted as saying, adding that doctors had examined her, "but I didn't have any treatment so there was no explanation there."
By the time of MacKillop's death at age 67, her order numbered 750 nuns, ran 117 schools and had opened orphanages and places of retreat for the needy, Agence France-Press reported.
She is reputed to have started her first school in a disused stable and to have started her order at the age of 24.
It was her strong will that drove MacKillop's achievements, but it was also responsible for sometimes getting her into trouble.
In 1871, she was excommunicated for inciting her followers to challenge the orthodox teachings of the church, but the bishop who made the decision later recanted and she was welcomed back, gaining approval for her work from Pope Pius IX on a visit to Rome in 1873.
While visiting Australia in 2008, Benedict described MacKillop as "one of the most outstanding figures in Australia's history," and today Australian Prime Minister Kevin Rudd called her canonization "a great tribute to her hard work in education."
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