And the national head coach has declared that the 86-times capped Wales record try scorer (57) will not only be in the squad, but is guaranteed to start his final game for his country, assuming fitness.
"Shane is playing well at the moment, we will be selecting him on Sunday and we want him to start against the Wallabies," said Gatland.
"He has been a magnificent servant, not just to Welsh rugby, but to the world game and fans who believe he deserves a magnificent send-off will not be disappointed.
"This game is important to us, it will help us put the disappointment of those final two matches in the World Cup behind us and can be a springboard to our 2012 Six Nations campaign.
"We will name a 26-man squad this weekend which will largely contain everyone in that World Cup squad who is available to us."
At 34-years-old Ospreys wing Williams, who won the IRB World Player of the Year award in 2008 and has featured on two British & Irish Lions tours (2005, 2009) - scoring a further two tries to add to his total for Wales - had suggested he would retire after the RWC in New Zealand, but has been persuaded to postpone his decision.
But Gatland says he will now allow Williams to go gracefully into the international retirement he so richly deserves and resist any temptation to try to persuade him to return should future circumstances tempt him to do so.
"Shane is still playing very well and you never say 'never' as a coach, but if this was the first game of the Six Nations we would be selecting players who we know will be around for the next RWC and he would not be in that category," said Gatland.
"In the New Year the philosophy will very much be to start planning for 2015, so if fans want to see the top try scorer Welsh rugby has ever seen in international action for one last time at the Millennium Stadium, then this game with the Wallabies should be their final opportunity."