Ahmed Al Ahmed, 43, was awarded a Key to the City and presented with a lifetime beach parking permit by Waverley Mayor Will Nemesh during a ceremony on Wednesday night.
Matilda, a 10-year-old girl was among 15 people killed when two men opened fire on a Hanukkah celebration at Bondi Beach on December 14, in Australia's deadliest terror attack.
Video captured the moment Mr Al Ahmed crept up behind one of the gunmen and single-handedly tackled and disarmed him, slowing down the attack and saving lives.
Mr Al Ahmed was himself shot twice in the arm during the incident with Mayor Nemesh describing his actions as "remarkable".
"When evil came to Bondi Beach, Ahmed and countless ordinary heroes did not hesitate to confront it," Mr Nemesh said.
"His courageous actions were motivated by his desire to save innocent lives.Â
"His instinctive courage, his willingness to put others first, and his quiet bravery will never be forgotten."
Gefen Bitton, 30, who ran to Mr Al Ahmed's aide and then helped to confront the gunman, will also be recognised at an upcoming ceremony.
Rabbi Leibel Lazaroff, 20, who rushed to help a critically injured police officer during the attack was honoured at a ceremony in February.
While in hospital Al Ahmed was presented with a cheque for $2.5 million raised from donations under a GoFundMe.
He was also handed the Key to the City of Canterbury Bankstown as part of its 2026 Australia Day Awards
One of the alleged gunmen, 24-year-old Naveed Akram remains behind bars facing dozens of charges, including terrorism offences and multiple counts of murder.
His 50-year-old father Sajid Akram, was shot dead by police during their alleged terror attack.
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