The move to categorise the animals as endangered means Australia's environmental laws will now afford the devils, known for their powerful jaws and bloodcurdling growl, greater protection on the island.
Death by starvation
Researchers from the University of Sydney have found that the facial tumours originated from a single cell line that spreads through the devils biting inflicted on each other's faces as part of a bizarre mating ritual or while squabbling over food.
The disease causes grotesque facial tumours that eventually prevent them from feeding, leading to starvation and eventually death.
Due to the Tasmanian devils' genetic similarity, their bodies do not recognise the tumours as foreign cells and do not produce an effective immune response.
The government has pledged $7.8m over five years to research the disease and support captive breeding programmes, including plans to relocate breeding pairs to island sanctuaries.
Zoos on mainland Australia are breeding captive populations to prevent their total extinction.
The Tasmanian devil has been made internationally notorious via its cartoon namesake "Taz" in the Looney Tunes series.
Warner Bros, which owns Taz, and CNN founder Ted Turner, who started the Cartoon Network, have helped fund the fight against the disease.
Early European settlers named the feisty marsupial the devil for its spine-chilling screeches, dark appearance and reputed bad temper which, along with its sharp jaw, made it appear incredibly fierce.
The species is restricted to Tasmania after competition from the dingo, a species of wild dog, led to its extinction on mainland Australia.
The Tasmanian devil became Australia's largest remaining marsupial carnivore after the extinction of its distant cousin, the thylacine or Tasmanian tiger, last century.