The late Pope issued the Bene Merenti medal to Anne Maguire, one of the Maguire Seven, three days before he died.
The Archbishop of Westminster, Cardinal Cormac Murphy-O’Connor, said Mrs Maguire had been awarded the medal - which translates to well-deserved - in recognition of her “remarkable ability to forgive” as well as her work for her parish, family and community.
Mrs Maguire, 68, of Willesden, north-west London, was imprisoned in 1976 with five members of her family and a family friend, including her husband Patrick, her son Vincent, 17, and her 14-year-old son also called Patrick following the 1974 IRA bomb attacks in Guildford and Woolwich.
The bomb attacks were among the most high-profile atrocities carried out at the height of the IRA’s bombing campaign in Britain. A device at the Horse and Groom pub in Guildford killed five people and injured more than 100.
Four people, Gerry Conlon, Paddy Armstrong, Paul Hill and Carole Richardson, were arrested in 1974 and jailed the following year for life and became known as the Guildford Four.
Paul Hill and Paddy Armstrong were also jailed for the Woolwich bombing in which two people died.
Later Gerry Conlon’s father, Guiseppe, and members of the Maguire family - the Maguire Seven - were arrested and jailed.
The Maguires were convicted of possessing nitro-glycerine, which was allegedly passed to the IRA to make bombs. Mrs Maguire was sentenced to 14 years in prison.
In October 1989 the Court of Appeal quashed the sentences of the Guildford Four amid doubts raised about the evidence against them. In 1991 the Court of Appeal overturned the convictions of the Maguires.
Last February, Tony Blair issued a public apology to the Maguire Seven and the Guilford Four for the miscarriages of justice.
Cardinal Murphy-O’Connor said: “Her work for others, her strength as a woman and a human being, her constant faith, her remarkable ability to forgive - these are the reasons why the Pope wanted to single her out and hold her up as an example.”