The hosts eased through the second semi-final at the Oval, overpowering South Africa by 40 runs on Thursday (Friday AEST).
England's stars were captain Nat Sciver-Brunt and Heather Knight, who guided their team away from a perilous 3-23 with a mighty match-winning fourth-wicket stand of 133.
England finished on 5-169, a target well beyond South Africa, who ended well short on 8-129.
Australia had reached the final with a one-sided eight-wicket victory over West Indies on Tuesday (Wednesday AEST) and will start firm favourites.
Unbeaten through this tournament, the Aussies will take some stopping as they attempt to write another glorious chapter in a competition they have dominated down the years. They will be aiming to reclaim the crown they let slip to New Zealand in Dubai two years ago.
The omens are bright for the Aussies, who have beaten England in their three previous T20 World Cup final clashes, though the hosts showed their capabilities in a compelling all-round display against the South Africans.
England recovered from a shaky start, sliding to 3-23 off 3.2 overs, and it was all due to a magnificent partnership between returning skipper Sciver-Brunt and Knight.
The pair transformed England's prospects in a stand of 133 before eventually being undone by Nonkululeko Mlaba.Â
Sciver-Brunt made 75 from 47 deliveries before hoicking to the leg side and finding Tazmin Brits.
Two balls later, Knight departed advancing down the wicket not quite able to get hold of a drive that she sliced to Laura Wolvaardt at cover. She had contributed 58, also from 47 balls.
South Africa were always struggling to match that, with England's bowling and field work matching the effectiveness of their batting.
Sophie Ecclestone took two smart catches, the first of which got rid of opener Wolvaardt for 17.
The hammer blow was the loss of Marizanne Kapp, who, having added just five, tried to flick the ball into the leg side but got a leading edge, leaving Sciver-Brunt with the simplest of catches.
That left the South Africans on 3-68, well behind in the run chase. Brits battled on, getting to 50, but when she miscued Charlie Dean, who had earlier dismissed Kapp and finished with 2-31, to cover, there was no way back for South Africa.
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