The bomb-sniffing dog was awarded the War Dog Operational Medal and the RSPCA's Purple Cross, its highest award for animal bravery.

The 12-year-old Labrador-Newfoundland cross was only the second animal to win the Purple Cross for wartime service, following Murphy, one of John Simpson Kirkpatrick's famous Gallipoli donkeys.

Her handler, David Simpson, wrote on Facebook that Sarbi had suffered a number of seizures in recent weeks and that a scan last week had uncovered a brain tumour.

Warrant Officer Simpson announced that the decorated dog had died peacefully and with her loved ones on Friday.

"Sarbi will live on in everyone's hearts and minds and I hope that her story of perseverance and determination will inspire you to do whatever you can to achieve your goals and dreams," he wrote on Sarbi's official fan page.

Sarbi went missing when insurgents attacked a convoy of Australian and Afghan soldiers in Oruzgan province in September 2008.

Nine Australian soldiers were wounded in the attack, and it was discovered in the aftermath that Sarbi had disappeared.

SAS Trooper Mark Donaldson won the first Victoria Cross to be awarded to an Australian since 1969 for his actions in the same battle. 

An American special forces soldier then came across Sarbi with some Afghan locals in a remote part of the province 13 months later and arranged for her to be returned to the Australian base at Tarin Kowt, to the joy of her handler.

A scan of the dog's microchip confirmed she was Sarbi.

"We will never know what Sarbi endured and saw during her time in the desert, but if she could speak, I'm sure she would have some stories to tell us," the RSPCA's national president, Lynne Bradshaw, said when awarding her the Purple Cross in 2011.

Sarbi had spent the past five years in retirement, living with Warrant Officer Simpson.

Last month the hero dog attended the opening of a $1 million dog park named in her honour in Warner, north of Brisbane.