Australia's economy grew for a fifth straight quarter in the first three months of the year, but at a slower rate than the previous quarter.
Official figures show GDP in the three months to March was 0.5% higher than in the same period last year.
Growth for the last three months of 2009 was also revised up to 1.1%, giving Australia a growth figure of 2.7% for the year to the end of March.
Finance minister Wayne Swan called the figures "another very solid outcome".
He said the continued growth of the economy demonstrated its strength relative to other developed economies.
Australia avoided falling into recession last year, thanks largely to continued demand for its natural resources from China.
But the economy has also benefited from a significant economic stimulus package.
Growth in GDP was driven by an 11.6% increase in public investment, the Australian Bureau of Statistics said.
But Mr Swan said the withdrawal of some stimulus measures was an encouraging sign that the recovery was self-sustaining.
Investors also reacted positively, with the Australian dollar rising on the hope that interest rates would continue to rise.
On Tuesday, Australia's reserve bank opted to keep rates on hold at 4.5% following a series of increases.