Immigration minister Chris Evans told Senate question time this afternoon he had overturned his department's refusal to grant permanent residency to the family because of the potential cost to the public purse of the Moellers' 13-year-old son Lukas, who has Down's.
Senator Evans's intervention comes a day after the Migration Review Tribunal upheld the department's decision to refuse the application on health grounds.
Dr Moeller, a specialist physician, has been supported by the residents of Horsham, where he practises.
Dr Bernhard Moeller is the only physician at the Wimmera base Hospital, at Horsham, serving a region of more than 50,000 people.
``It was clear to me that Dr Moeller and his family are making a very valuable contribution to their local community,'' Senator Evans told the Senate.
``Dr Moeller is providing a much needed service in the area, the family have integrated very well and they have substantial community support.''
The Australian Medical Association (AMA) said the Immigration Minister's decision to grant a permanent visa to the Moeller family is a great victory.
AMA president Doug Travis says Australia cannot afford to lose people like Dr Moeller, who is the only internal medicine specialist servicing 20,000 people in Horsham in western Victoria.
"This is a great victory of common sense over bureaucratic process," he said.
"It's a great victory for the people of Horsham, to have a doctor in their town. It's really difficult to get doctors to work in country towns, and they need this man."
The executive director of Down Syndrome Victoria, Catherine McAlpine, said, "We would strongly call for the Migration Act to no longer be exempt from the Disability Discrimination Act."
Professor Professor Ron McCallum, elected to the International Monitoring Committee for the UN's Convention on the Rights of Persons with Disabilities, said the residency laws go against the spirit of that convention.
Australia ratified the convention last year, and Professor McCallum says the Federal Government should now change the law.
The respected professor told the ABC radio, "Migration decisions which can be made without reference to the Disability Discrimination Act are in danger of being in conflict with the spirit of the United Nations convention. I think one has to distinguish between disabilities per se and diseases.
Obviously cost is not an irrelevant consideration in some circumstances, so I would want, at the very least to have these migration decisions subject to the rigours of the Disability Discrimination Act and that can only be done if one repeals the exemption in section 52."