Explosives expert Andy Peat, of 33 EOD Regiment Royal Logistic Corps, is the first soldier outside the Danish military to receive the Anders Lassen Award from Crown Prince Frederik.
Warrant Officer Class One (WO1) Peat, from Edinburgh, was supporting a Danish patrol in January when the group was blasted by an improvised explosive device (IED).
They were moving into a compound used for manufacturing IEDs in the Upper Gereshk Valley when one of the bombs triggered on the roof, severely injuring Oversergeant (WO1) Rene Brink Jakobsen.
As he went to his aid, WO1 Peat noticed another IED lying underneath the Danish soldier and worked skilfully to disarm the device by cutting its wires.
While colleagues struggled to stretcher the Dane off the 14ft (4m) roof, he lay across the path of another IED, using himself and his body armour as a shield to protect the rescuers.
WO1 Brink Jakobsen later died of his wounds, leaving behind a wife and three children.
WO1 Peat is credited with saving the lives of several other Danish soldiers and members of the Afghan police that day.
The Anders Lassen Foundation was set up in memory of a soldier who was awarded three Military Crosses and was posthumously awarded the Victoria Cross for his work in the Second World War.
Each year the Foundation chooses a single recipient for its honour and cash award, and this year selected WO1 Peat for his "extraordinary courage and determined actions".
At a ceremony at the Royal Danish Military College in Copenhagen, he received the award and donated the 25,000 Krone (about £3000) to his late colleague's wife, Camilla Brink Jakobsen, and children, Sara, Maja and Thor.
He said: "I was slightly taken aback when I had the phone call to say I'd been awarded it - it's slightly surreal. Meeting the Crown Prince has been a great experience."
The serviceman paid tribute to his own wife after the ceremony and said of his attempt to save WO1 Jakobsen that "all the guys would have done the same thing".
He said: "To bring my wife and daughter along has been fantastic. I knew when my wife heard about what I'd done I'd be mostly in trouble. She deserves the rewards as she has to stay up at home at night worrying all the time.
"It's just about doing your job and thinking about what you've got in front of you and trying your best to get out of that predicament as quickly as possible.
"If you take any IED operator and put him in front of the same predicament, all the guys would have done exactly the same thing."
Mrs Brink Jakobsen said: "I was quite overwhelmed that he wanted to give the money to our family.
"I really appreciate what he did in Afghanistan and I'm very grateful that he would think of us in this way. We talked a little bit about what happened, with Rene's Danish colleagues too, and with Andy, and I was a little prepared about who I was going to meet today, but it is overwhelming. It's been very emotional.
"Rene was a guy who spread joy everywhere."
Lieutenant Colonel Claus Wannen, head of the Danish Special Forces, said: "The Foundation grants people who have made an extraordinary effort and we're very picky about who we want to actually have the award.
"Warrant Officer One Andy Peat made an extraordinary contribution. On that day he proved his worth and it's most likely he saved a number of lives that evening.
"It wasn't until the day after that I heard the full story that WO1 Peat's name was mentioned with regards to selfless service. It does not strike me as a surprise that he was the one making a difference on the roof that night."
WO1 Peat, along with the Danish colleagues he served with in Afghanistan, laid a wreath for WO1 Brink Jakobsen in a public area where other fallen Danish soldiers are remembered.