Cpl. Ben Roberts-Smith, 32, was presented the award for extreme devotion to duty and conspicuous gallantry in the face of the enemy.
In June, with members of his patrol pinned down by the enemy in Afghanistan, Roberts-Smith revealed his position to the enemy to draw fire away from his team. He then stormed enemy lines, destroying two enemy machine gun positions.
Roberts-Smith says his actions to protect his team mates were simply instinctive from his military training.
"I think for everyone there, including myself, what's going through your mind is you just won't let your mates down," the Australian Broadcasting Corp. quoted him as saying.
"It's just like being on a football team, you don't let your mates down, you go as hard as you can until the game's won. I saw a lot of brave men do a lot of brave things that day. The decisions I saw made were heroic."
Governor-General Quentin Bryce, representing Queen Elizabeth II at the ceremony, presented Roberts-Smith with the medal in Perth and thanked him for his bravery.
"Corporal to use a very Australian expression, it's a big day, but on the 11th of June 2010, you saw a far bigger day than this one," Bryce said. "The citation distills what you did that day and bears out your awards distinction."
Prime Minister Julia Gillard also paid tribute to the soldier.
"Benjamin Robert-Smith you went to Afghanistan a soldier. You came back a hero," she said.
Robert-Smith is now the most-decorated member of the Australian military.
The Victoria Cross is the highest military decoration given to members of the armed forces of the United Kingdom and the various Commonwealth countries.