The tiny royal has been given several gifts on the royal tour so far – a giant blue teddy bear, a miniature bike and helmet and a mini dinghy – but the cuddly wombat is bound to be his favourite.
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When he was presented with the gift, Duchess of Cambridge nee Kate Middleton, had the eight-month-old in her arms as a delighted-looking Prince William held the cute short-legged, stubby-tailed toy up to George.
The Governor-General appeared chuffed with his choice, as little George playfully felt the fluffy fur.
William and Kate arrived at Admiralty House on Wednesday after attending a reception in Sydney Opera House – where Prince William gave a speech and the pair watched an Aboriginal welcome performance – and meeting the hundreds of well-wishers who had come to welcome the royals.
It is thought that about 400 guests were in attendance at the reception, including some of Australia's cricketers, along with children dressed to represent all the nations competing in the 2015 Cricket World Cup.
The couple were then taken by police boat across the beautiful sunny Sydney Harbour to Admiralty House where Sir Peter and Lady Cosgrove were waiting for them.
There the couple were greeted by the Governor-General and his wife Lynne, and the foursome posed for a striking photograph with the iconic skyline, featuring the unique Sydney Opera House, in the background.
The arrival of the royal party in Sydney marks the beginning of the second leg of the tour of New Zealand and Australia. The couple will be there for a total of 10 days.
In his speech at the welcome reception, William joked that they "suspect George's first word might be 'bilby' – only because 'koala' is harder to say."
The Prince said: "We really look forward to our time here together as a family."