John Short was arrested after leaving "Bible tracts" in a Buddhist temple in the capital Pyongyang during a tour.
North Korea's official KCNA news agency said 75-yer-old John Short had admitted to violating North Korean law and apologised.
"Short acknowledged that his actions were ... unforgivable crimes in violation of our laws, offered an apology and begged for forgiveness," KCNA said.
The KCNA news agency said the decision to expel Mr Short was a demonstration of North Korea's "generosity", adding that the Australian had allegedly distributed religious leaflets in a crowded subway train in Pyongyang during a previous tour in August 2012.
Missionary work is illegal in North Korea.
The Department of Foreign Affairs and Trade (DFAT) in Canberra said it was yet to confirm reports that Mr Short would be released and deported.
"The department is aware of media reports that John Short will be expelled from the DPRK. We are seeking to confirm these reports," a DFAT spokesperson said.
Australia has no diplomatic representation in North Korea, and has been seeking information about Mr Short through the Swedish embassy in Pyongyang.
The Australian government had also sought assistance from other countries to exert pressure on North Korea, particularly the US which has experience with wayward missionaries in the reclusive Asian country.
