Mali, a Belgian Malinois, has been awarded the PDSA Dickin Medal - the equivalent of the human Victoria Cross for his heroic actions in sniffing out Taliban booby traps during a highly sensitive military operation in 2012.
The eight-year-old dog was instrumental is assisting troops to clear militants from a Kabul tower block despite suffering serious shrapnel injuries.
He is credited with saving British and Afghan lives as he took part in the Special Boat Service (SBS) assault.
"Despite sustaining quite horrendous injuries, he absolutely stayed by his handler's side and forged forward with them to help them carry out their duty. It's that gallantry and devotion to duty that we are recognising," said Jan McLoughlin, director-general of the veterinary charity, People's Dispensary for Sick Animals (PDSA).
Mali was part of a mission aimed at ending a major siege by an armed suicide squad holed up in the tower block in Kabul and securing a key Taliban stronghold during the operation.
He stayed by the side of his military handler, who cannot be named, as he was sent through direct fire on two separate occasions to conduct searches for explosives.
He successfully indicated the presence of insurgents numerous times, giving the UK assault force vital seconds to engage the enemy in close quarter combat.
Mali was seriously injured by three grenade blasts, with the first two explosions causing injuries to his chest, front and rear legs.
A further blast detonated close to his face, causing the loss of his front tooth and damage to his right ear.
The dog, who has since recovered from his injuries, is believed to have played a key role in breaking the stalemate that had begun to develop in the war in Afghanistan.
"I am extremely proud of Mali. The way he conducted himself when it mattered most enabled my colleagues to achieve success in close combat. Being awarded the PDSA Dickin Medal recognises Mali's vital role within the force that day," said Corporal Daniel Hatley, his current handler.
Now retired from frontline duties, he works at the RAVC's Defence Animal Centre in Leicestershire, where he and Hatley help train new dog handlers.
Dogs were highly valued during the Afghanistan campaign for their ability to sniff out homemade bombs and explosives. Special forces units also regularly used attack dogs during raids.
The Dickin Medal was instituted by PDSA founder Maria Dickin in 1943 as the highest award any animal in the world can achieve while serving in military conflict.
Previous recipients include 32 pigeons, 31 dogs, four horses and one cat. As Mali received his award today he also marked the 100th centenary of the charity's inception.