  The coupling of the metric to an incoherent dust introduces into spacetime a
privileged dynamical reference frame and time foliation. The comoving
coordinates of the dust particles and the proper time along the dust worldlines
become canonical coordinates in the phase space of the system. The Hamiltonian
constraint can be resolved with respect to the momentum that is canonically
conjugate to the dust time. Imposition of the resolved constraint as an
operator restriction on the quantum states yields a functional Schr\"{o}dinger
equation. The ensuing Hamiltonian density has an extraordinary feature: it
depends only on the geometric variables, not on the dust coordinates or time.
This has three important consequences. First, the functional Schr\"{o}dinger
equation can be solved by separating the dust time from the geometric
variables. Second, the Hamiltonian densities strongly commute and therefore can
be simultaneously defined by spectral analysis. Third, the standard constraint
system of vacuum gravity is cast into a form in which it generates a true Lie
algebra. The particles of dust introduce into space a privileged system of
coordinates that allows the supermomentum constraint to be solved explicitly.
The Schr\"{o}dinger equation yields a conserved inner product that can be
written in terms of either the instantaneous state functionals or the solutions
of constraints. Examples of gravitational observables are given, though neither
the intrinsic metric nor the extrinsic curvature are observables. Disregarding
factor--ordering difficulties, the introduction of dust provides a satisfactory
phenomenological approach to the problem of time in canonical quantum gravity.
