The first Australian soldier to be awarded the Victoria Cross in 40 years doesn't see himself as a hero, but the prime minister insists Trooper Mark Donaldson is "the stuff of Australian legend".

Trooper Donaldson, 29, was awarded the VC medal - the nation's highest military honour - for rescuing a coalition interpreter during fighting in Afghanistan last year.

The Special Air Service (SAS) soldier is the first person to receive the Victoria Cross for Australia.

It was established in 1991 to replace the Imperial VC awarded previously to 96 Australians.

Trooper Donaldson said the award was a great honour, but it wouldn't change who he was.