Prime Minister Julia Gillard says Pope Benedict XVI's resignation marks a "genuinely historic moment" for the country's Catholics, who will miss the 85-year-old pontiff.
"You would have to have lived several hundred years to have heard news like that," she told parliament on Tuesday.
"The Pope's announcement marks a genuinely historic moment which many Australian Catholics will greet with great emotion."
Many Australians saw Pope Benedict during his visit here for the Church's World Youth Day in 2008 and would remember the scenes and the crowds he attracted, she said.
"Thousands of others travelled to Rome in 2010 to see him declare Mother Mary MacKillop as our nation's first saint: Saint Mary of the Cross. And that was a time of jubilation across the nation.
"They will miss him."
Ms Gillard said her thoughts would be with the country's Catholics over the next few weeks as the church decided on a replacement.
"Whoever is elected to take Pope Benedict's place, the Catholic Church will remain one of the most important human institutions, containing within it all the strengths and faults of its hundreds of millions of believers; one facing all the challenges of the modern world," she said.
"My thoughts today are with Australia's Catholic community as they prepare for Ash Wednesday tomorrow and the season of Lent, and as they live through what is an historic coming few weeks."