Commons Leader Andrea Leadsom made the error in the Commons when attempting to praise the Pride And Prejudice author, who will feature on the new £10 note due for issue in September.
Bank of England Governor Mark Carney unveiled the design of the new £10 banknote earlier this week at Winchester Cathedral, where Ms Austen was buried after her death in 1817 at the age of 41.
Ms Leadsom, responding to comments from shadow Commons leader Valerie Vaz praising leading female figures, said: “I would just add one other great lady to that lovely list, who I am delighted to join in celebrating, and that’s that of Jane Austen, who will feature on the new £10 note, which I think is one of our greatest living authors.”
Amid laughs from both benches, she corrected herself, adding: “Greatest ever authors, and I think it’s fantastic that at last we are starting to recognise - well I think many of us probably wish she were still living - but I absolutely share the sentiment.”
Ms Leadsom withdrew from the Conservative party leadership race last year, paving the way for Theresa May to take on the role.
She was appointed Commons Leader in the post-election reshuffle, meaning she attends the Cabinet but is not a full member.