The Tamil "Biloela" family has been granted permanent residency by the Albanese government.
Immigration Minister Andrew Giles announced on Friday he had used his ministerial power to intervene to give visas to the family to allow them to stay permanently.
For the Nadesalingam family, whose cause was taken up by the Biloela community where they had settled, it is the end of a battle that involved years of detention, including on Christmas Island, court action and uncertainty.
The parents came to Australia separately by boat, met and married here, and their two daughters, Kopika and Tharnicaa, were born in Australia.
But their refugee claims were rejected, and they were put into detention after their visas expired in 2018.
One of the first acts of the Labor government was to allow the family to return to the Queensland town.
A team from the Home Affairs department visited the family to tell them personally of the decision.
Giles said Labor had promised before the election that it would allow the family to return to Biloela and would resolve their immigration status.
"Today, the government has delivered on that promise," he said.
He said the decision "follows careful consideration of the Nadesalingam family's complex and specific circumstances".
He also sent a strong message designed to tell people smugglers not to take the decision as a signal. Since the change of government several boats have been intercepted from Sri Lanka and the passengers returned.
"During the past two months, the government has demonstrated we will continue to intercept and return any unauthorised vessels seeking to reach Australia, " Giles said.
"For anyone who attempts to migrate via an unauthorised boat to Australia - you will be caught, returned or sent to a regional processing country.
"This government remains committed to Operation Sovereign Borders and stopping people smuggling."
But shadow home affairs minister Karen Andrews said "actions have consequences and this sets a high profiler precedent.
"If undermines the policy that if you come here illegally you will never settle in Australia," she said.
Author: Michelle Grattan - Professorial Fellow, University of Canberra