Watson was also named player of the year for Tests and one-day internationals at a gala ceremony at a Melbourne [ Images ] casino while David Hussey [ Images ] prevented a clean sweep by winning the Twenty20 [ Images ] award.
The 29-year-old Watson has accumulated 2,067 runs at an average of 39 over the three forms of international cricket since the voting period began on Feb. 14, 451 more than the second most prolific runmaker Mike Hussey [ Images ].
Despite opening the batting, Watson also took 47 wickets at an average of 26.53 for his country, Australia's [ Images ] fourth highest wicket-taker over the same period.
One of the highlights of his year was the unbeaten 161 he scored to help Australia make a winning start in the one-day series against England [ Images ], Watson sealing victory with a six at the start of the 50th over.
The all-rounder was eventually named Player of the Series on Sunday.
Watson will have been less happy with the three run outs he was involved in during the Ashes series.
Australia captain Ricky Ponting [ Images ] (2006 and 2007) is the only other player to have won the Allan Border Medal, which is decided by votes from players, umpires and media, two years in a row.
Former skipper Mark Taylor and middle-order batsman Doug Walters were also inducted into the Australian Cricket Hall of Fame at the ceremony.
State player: Usman Khawaja (New South Wales)
Bradman young cricketer: Trent Copeland (New South Wales)
Women's international player: Shelley Nitschke