Hayley Raso scored a first-half brace to give Australia the upper hand with emerging star Mary Fowler adding a third in the 58th minute.
Hometown hero Steph Catley buried a penalty to seal a famous victory in front of 27,706 fans at Melbourne’s AAMI Park and top spot in Group B.
Mackenzie Arnold pulled off a magnificent save in the 67th minute to maintain a clean sheet.
The Matildas, with skipper Sam Kerr watching from the bench, needed to win to avoid an embarrassing group stage exit without relying on Ireland to beat Nigeria.
They will instead finish top of group B with six points, after Nigeria drew 0-0 with Ireland in the other game to claim second and knock out Canada.
“I never, ever doubted the players in terms of stepping up and performing well,” Matildas coach Tony Gustavsson said.
“We knew it was going to be tough, but I knew the performance was going to be solid.
“I knew we were ready so even if we didn’t score early, I actually think we would’ve been looking good anyway.
“I was so convinced they were so ready to step up tonight.”
Shifted to the left wing, with Fowler returning from concussion, Caitlin Foord starred all night and combined brilliantly with vice-captain Steph Catley.
Right-back Ellie Carpenter was relentless while Emily van Egmond, who held her spot ahead of Cortnee Vine, justified her selection with a cool-headed performance in Australia’s front two.
Centre-backs Clare Hunt and Alanna Kennedy were calm-headed while Kyra Cooney-Cross and Katrina Gorry were busy all night in midfield.
Australia were far more patient on the ball than in their 3-2 loss to Nigeria that had put their campaign on a knife’s edge.
Raso got things started when she finished off a blistering end-to-end move in the ninth minute.
Australia thought they’d doubled their lead when Fowler bundled home after a chaotic build-up in the 37th minute, but after a lengthy VAR referral, Carpenter was ruled offside.
It didn’t rattle the Matildas and, two minutes later, Canada’s defence failed to deal with a Cooney-Cross corner and Raso scored her second goal.
Gustavsson, who had been realistically coaching for his job, picked up a yellow card in first-half injury time.
In the 58th minute, Catley released Foord down the left wing and the attacker charged forward, skipped her way to the goal line then cut back for Fowler.
With the ball slightly behind her, the young striker impressively used her left foot to drag the ball towards goal and it clinked off the post and over the line.
Mackenzie Arnold brilliantly stuck out her leg to deny Deanne Rose in the 66th minute as Canada sought a reply.
Fowler hit the post in the 80th minute but Australia made it four in the 94th.
A VAR referral determined Jessie Fleming had stepped on Gorry inside the 18-yard box.
Proud Melburnian Catley coolly stepped up and buried the penalty to put an exclamation mark on the victory and send AAMI Park into ecstasy.
Heartbroken Canada coach Bev Priestman couldn’t explain the Olympic champions’ flat display.
“Football can be cruel sometimes and tonight it was cruel,” Priestman said.
“We got punished, we got an early goal, and I think the team lacked belief.
“I was with them right to the very end, they kept pushing, we made changes, and it just wasn’t our night tonight.
“At this level, margins are fine.”
AAP
