The federal government has approved permanent visas for the Nadesalingam family.
Supporters of the family say home affairs department officials visited the family in the central Queensland town of Biloela at 2.30pm on Friday to deliver the good news.
Immigration Minister Andrew Giles later confirmed "following careful consideration of all relevant matters and options" he had exercised his power under section 195A of the Migration Act 1958 to intervene in the case.
In June when the family returned to Biloela, Prime Minister Anthony Albanese said nothing was stopping the Tamil asylum seekers from obtaining permanent residency in Australia.
Priya and Nades Nadesalingam and their daughters Kopika and Tharnicaa returned to Biloela in June for the first time since being detained in March 2018.
The former coalition government tried to deport the asylum seekers to Sri Lanka, but an 11th-hour court injunction saw the four held at the Christmas Island detention centre for two years, then moved to community detention in Perth.
Following the May election, the new Labor government gave the family permission to return to Biloela on bridging visas.
Mr Giles said the government had delivered on its promise to resolve the family's immigration status.
"This decision follows careful consideration of the Nadesalingam family's complex and specific circumstances," he said.
"I extend my best wishes to the Nadesalingam family."
Home to Bilo campaign co-founder Angela Fredericks said Friday's decision showed the power of communities.
"We have witnessed over four and a half years how emails, phone calls, letter writing, and keeping that pressure on our politicians can actually change the course of individuals' lives," she told AAP.
"We've really come to understand just how cruel the Australian immigration process is. I know for a fact that there's 11,000 other individuals who are here in Australia in the exact same circumstances.
"I believe Australia is ready for a different conversation about how we treat asylum seekers, and how we continue to make Australia a more vibrant place."
The Asylum Seeker Resource Centre also welcomed the news, with advocacy director Jana Favero saying she hoped the Nadesalingam family's story was replicated across the country.
"We really look forward to the Albanese Government moving swiftly on other people who are in limbo and honouring their election commitments, which is to grant permanency to everyone who was found to be a refugee in Australia," she told AAP.
The coalition government had concerns letting the family stay in Australia would be a green light for people smugglers.
Mr Giles said the Albanese government would continue to intercept and return any unauthorised vessels seeking to reach Australia, under Operation Sovereign Borders.
"For anyone who attempts to migrate via an unauthorised boat to Australia - you will be caught, returned or sent to a regional processing country," he said.
"I do not want people to die in a boat on a journey when there is zero chance of settling in Australia.
"This has not changed since the last government. We are not considering changing this policy."
But Shadow Home Affairs Minister Karen Andrews said the government's decision sets a "high profile precedent".
"It undermines the policy that if you come here illegally you will never settle in Australia," she said in a statement.
"Together with Labor's policy to abolish Temporary Protection Visas, this gives people smugglers a product to sell to desperate families and people."
Australian Associated Press
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