Audina, 20, left her native country to join her husband, a Dutch gospel singer of Indonesian descent.
The move came at the end of a troubled period for the talented badminton player.
She was dropped from the Indonesian squad after a rift with the country's national association and prior to that she spent months out of the game nursing her dying mother.
But after qualifying for Dutch residency she bounced back to win the Netherlands Open in October and earlier this year beat world number one Camilla Martin en route to the Taiwan Open crown.
Although Audina is now a naturalised Dutch citizen, fears had been raised that Indonesia's badminton federation would attempt to block her bid to play at the Olympics.
But Netherlands team manager Martijn van Dooremalen said Saturday the International Olympic Committee (IOC) had given the green light to Audina's Sydney campaign.
"Of course we are delighted that the IOC have made this decision and that Mia will be representing the Netherlands," he said.
"There were no objections from Indonesia and they should be very proud that Mia will be playing in the Olympics.She is an Indonesian after all," van Dooremalen added.
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