Country music singer Lee Kernaghan OAM has been named Australian of the Year 2008 at a ceremony in front of Parliament House in Canberra.

Micro-finance entrepreneur David Bussau AM was named as Senior Australian of the Year and MotoGP champion Casey Stoner was announced as Young Australian of the Year.

Johnathon Welch of Choir of Hard Knocks fame was announced as Australia's Local Hero 2008.

Kernaghan's musical achievements - which include 24 golden guitars at the Australian Country Music Awards - are well-known, but tonight's award reflects his efforts to help rural families through his 'Pass the Hat around' tours.

The tours have raised up to a $1 million for communities in need.

David Bussau is a social entrepreneur and one of the pioneers of the micro-enterprise movement, where developing world poverty is alleviated using small loans to the poor.

In 1979 he co-founded Opportunity International, which has 1.25 million loans to people in 23 countries.

The recipients were presented with their awards by Prime Minister Kevin Rudd, who acknowledged the achievements and contributions of all the award finalists.

"This year's award recipients are great examples of passion and commitment. They are all proud Australians who have earned our respect and our admiration," Mr Rudd said.

He paid particular tribute to Kernaghan for his dedication to helping others.

"He has rolled up his sleeves to make a real difference for those in need in rural Australia," he said.

"Lee is truly an Australian to make us all proud; you would have to travel a long way to find a better, more genuine bloke than Lee."

Kernaghan, 43, described the award as the proudest moment of his life.

"In all my dreams I could never have imagined that I'd receive an award like this - it's been a huge surprise and without doubt it's the greatest honour I have ever been given in my entire life," he said.

"I don't think it's totally sunk in yet, but it's a humbling experience because I know there is [a list] at least a mile long of more worthy recipients for the award than myself."

Kernaghan said he aimed to use his time as Australian of the Year to bring focus to the plight of families on the land who are struggling against drought and to also encourage people to support home-grown industries.

"Australia is just coming through the worst drought on record and there are families out there still experiencing extreme hardship," he said.

"What I'd like to do is look at ways that, individually and as a nation, we can assist those people - that we can support them and help them get back on their feet again."

More than 3,000 nominations were recieved from the public for the 2008 awards.