ABC said Immigration Minister Amanda Vanstone used her discretionary powers to allow Cui yu Hu to stay in Australia.
Hu came to Melbourne to visit her daughter 10 years ago. When her 12-month visitor's visa expired, no airline would fly the then 95-year-old back to China, ABC said.
The Immigration Department refused to issue her an aged parent visa, and on Wednesday, Hu lost an appeal against that decision.
But Vanstone, citing unique circumstances, issued her a permanent visa which allows Hu to remain in Australia and have access to Medicare, ABC said..