UPDATE: Self-proclaimed atheist Julia Gillard has paid tribute to Pope Benedict XVI, who has announced his shock resignation this week.
Ms Gillard spoke about the "remarkable news" during a statement to the House of Representatives before question time on Tuesday.
She described Pope Benedict's decision to stand down on February 28 was a "genuinely historic moment".
"Many Australians saw Pope Benedict during his visit here for the Church's World Youth Day in 2008, and I'm sure many members remember the scenes and the crowds on that visit," Ms Gillard 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 also used the occasion to speak about the "enormous contribution" the Catholic Church has made to "every field of life in Australia".
"But our thoughts naturally turn to the contribution in school education, health care and relief for the most disadvantaged in our society," she said.
"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.
"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."
Pope Benedict, 85, cited age and failing health for his decision to stand down after almost eight years in the job.
Senior cardinals will meet at the Vatican soon to choose a successor.
EARLIER: Australia's most senior Catholic Cardinal George Pell said news of Pope Benedict's resignation had come as a surprise.
Pope Benedict, 85, becomes the first pontiff in almost 600 years to resign as the head of the Roman Catholic Church, citing his age and failing health for the decision.
He will officially step down from the papacy on February 28.
Only three other popes have resigned in their time - Celestine V, Clement I and Gregory XII.
Cardinal Pell, the Archbishop of Sydney, paid tribute to the outgoing Pope, who was in the role for almost eight years.
"His resignation came as a surprise to me," Cardinal Pell said in a statement.
"We thank him for his years of devoted leadership and service and his brilliant teaching.
"We will pray for him as he enters retirement."
Cardinal Pell will be among the 118 cardinals who will elect a new pope at the Vatican.
Under canon law, the cardinals must meet in conclave within 20 days to elect the church's 266th pope.
The Archbishop of Melbourne Denis Hart issued a brief statement, saying: "Millions of Catholics are grateful for his holiness and teaching, and are encouraged by his gentle and loving service."
Pope Benedict made the shock announcement to a gathering of cardinals at the Vatican.
"In order to govern the bark of Saint Peter and proclaim the Gospel, both strength of mind and body are necessary, strength which in the last few months has deteriorated in me to the extent that I have had to recognise my incapacity to adequately fulfil the ministry entrusted to me," Pope Benedict said during the statement, which he delivered in Latin.
A select group of cardinals will meet in conclave in the Vatican's world famous Sistine Chapel in Rome to elect the next Pope.
The cardinals will hold secret ballots until one candidate attains a two-thirds majority.
Four ballots are held each day, two in the morning and two in the evening, until a result is obtained.
The ballot papers are burnt after each count. If a new pope has been elected, the papers are burned with a substance that gives off white smoke, to signal the news to the waiting crowds outside.
If no candidate has succeeded in gaining the necessary two-thirds majority, the smoke given off is black.
The electoral conclave must meet at least 15 days, but no more than 20 days, after the pope's death or resignation.
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