The Hunter Region now has two universities.
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Avondale at Cooranbong has been officially registered as a university.
With this, the institution becomes the first university based in Lake Macquarie.
"We really see becoming a university as that next natural step in our development," Avondale Vice-Chancellor Professor Kevin Petrie said.
"We've been on this journey. We're into our 125th year."
The Tertiary Education Quality and Standards Agency announced Avondale's university status.
The agency's chief commissioner Professor Peter Coaldrake said the decision recognised Avondale's commitment to students, significant research progress and community contributions.
Professor Kevin Petrie said the change would enable Avondale to "provide additional university education to the Lake Macquarie district".
"We feel proud and privileged to add to the diversity of the higher education sector," Professor Petrie said.
The evolution follows Avondale becoming a "university college" in 2019.
Avondale first applied for university status to the NSW government in 1994. It worked to extend its teaching and research profile.
Avondale had now become the "first Australian university created in Australia since 2012", Provost Professor Kerri-Lee Krause said.
Avondale now has more than 1200 students taking courses in four schools - arts and business; education; nursing and health; and ministry and theology.
Students come from Australia, New Zealand and the South Pacific.
Its research in health and wellbeing, education, biblical studies and Christian spirituality "shows we're here to serve our world for good."
Established by the Seventh-day Adventist Church, Avondale said it "respects spiritual diversity" and encourages wellbeing.