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Pope Francis has approved of the second miracle of Mother Teresa, thereby clearing the way for her sainthood.
On 15 December he received the final approval of the Congregation for the Causes of Saints meeting.
The canonisation is expected to be sometime later next year.
Speaking to Sky News, Thomas D'Souza, the Archbishop of Kolkata, a city which Mother Teresa made her home, said: "We are very happy and overjoyed with this news, the city of Kolkata has been waiting for this day. We thank God of the great gift he bestowed on us with Mother Teresa."
According to a statement from the Vatican, the second miracle involved a Brazilian man with a viral brain infection that resulted in multiple abscesses with triventricular hydrocephalus.
In December 2008 the patient was in a coma and dying and various treatments had been ineffective.
The patient’s wife is said to have continuously sought the intercession of Mother Teresa for her husband
He was wheeled into the operating theatre for emergency surgery at 18:10 on 9 December 2008 .
At the same time, his wife went to her church and along with the pastor begged Mother Teresa for the cure of her dying husband.
At 18:40 the neurosurgeon returned to the operating room and found the patient inexplicably awake and without pain.
He asked the doctor: "What I am doing here?"
The next morning he was examined, fully awake and without any headache.
On 10 September this year, the medical commission voted unanimously that his cure was inexplicable in the light of current medical knowledge.
The man, now completely healed, resumed his work as a mechanical engineer without any particular limitation.
Mother Teresa was born in Skopje in modern-day Macedonia to a Kosovar-Albanian family.
She left home at 18 and moved to Ireland and then to India in 1929.
In Kolkata she founded the Missionaries of Charity to look after the poorest of the poor. The organisation has more than 4500 religious sisters in 500 institutions operating in some 100 countries.
A Nobel laureate in 1979, she dedicated her life to looking after the destitute and dying in India.
She also helped rescue children trapped on the frontlines during the Siege of Beirut, as well as working with the hungry in Ethiopia, Chernobyl radiation victims and earthquake victims in Armenia.
Mother Teresa was criticised by some for her staunch Catholic beliefs on abortion and divorce, and for accepting the Legion d’honneur from Haitian dictator Jean-Claude Duvalier.
Mother Teresa died in 1997 at the age of 87.
Pope John Paul beatified her in 2003, which is the step before sainthood. Canonisation requires one more miracle after beatification.
Archbishop D'Souza told Sky News: "The date and place for the canonisation is yet to be determined, but for now we shall celebrate a thanksgiving mass at Mother's House in Kolkata in a day or so."