A new memorial plaque honouring Ordinary Seaman Edward "Teddy" Sheean VC was unveiled in Shropshire Park in the Tasmanian town of Ulverstone 79 years after his death.

Ordinary Seaman Sheean paid the ultimate sacrifice on December 1, 1942, while defending his HMAS Armidale I shipmates against enemy fighters during WWII.

Commanding Officer Navy Headquarters Tasmania Commander Andrew Wright represented Chief of Navy Vice Admiral Michael Noonan at the service to rededicate the memorial.

Commander Wright said Ordinary Seaman Sheean displayed incredible bravery in the action and was thoroughly deserving of Australia's highest military honour.

"Once he had helped free a life raft, allowing his shipmates to escape the sinking ship, Sheean then returned to his gun to engage the enemy," Commander Wright said.

"Although wounded in the chest and back, the 18-year-old shot down one bomber and kept the other aircraft at bay as his mates made their escape.

"He was last seen firing his gun as Armidale slipped below the waves."

Among the guests at the ceremony were the Tasmanian Minister for Veterans' Affairs, Guy Barnett, and Sheean family representative Garry Ivory.

Other guests included members of HMAS Launceston's ship's company, Australian Navy Cadets and members of the local RSL sub-branch.