The Vatican announced on Wednesday that during Tuesday's meeting with the head of the Vatican's saint-making office, Francis had approved a decree confirming a miracle attributed to Mr Romero's intercession.
Also approved was the miracle attributed to Pope Paul VI, paving the way for his canonisation as well.
No date has been set for either ceremony, which Francis would be expected to celebrate.
Mr Romero was gunned down by right-wing death squads on March 24 1980, as he celebrated mass in a hospital chapel.
The country's military dictatorship had vehemently opposed his preaching against the repression of the poor by the army at the start of the country's 1980-1992 civil war.
Francis unblocked Mr Romero's stalled sainthood case at the start of his pontificate and declared him a martyr in 2015.
The case had been held up for years by the Vatican, primarily due to opposition from conservative Latin American churchmen who feared Mr Romero's perceived association with liberation theology would embolden the movement that holds that Jesus' teachings require followers to fight for social and economic justice.
It was also delayed over related questions about whether Mr Romero was killed out of hatred for his faith or his politics.
If killed for his politics, it was argued, he could not be declared a martyr of the faith.
In the end, Pope Francis decreed in 2015 that Mr Romero was killed as a martyr out of hatred for the faith, or "in odium fidei".
He was beatified in San Salvador on May 24 2015, before a quarter of a million jubilant Salvadorans, and held up as model of peace and forgiveness for Francis' home continent.
Details of the miracle that paved the way for his canonisation were not revealed, but rumours have circulated for more than a year that a possible miracle was being studied.
When Francis declared Mr Romero a martyr, officials said the decree had confirmed the acceptance of a new understanding that martyrs can be killed, even by churchgoing Catholics, out of hatred for their Gospel-inspired work in favour of the poor and disenfranchised.
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