Lassila recorded a two-jump combined score of 214.74 points.

China's Mengtao Xu had a chance to snatch the gold medal from the Australian's grasp with the final jump of the competition, but she stumbled on her landing and finished sixth overall.

Two other Chinese athletes, Nina Li and Xinxin Guo, were second and third respectively.

Lassila blew her knee out in the 2006 Olympic final in Turin, making her victory in Vancouver all the more sweet.

"This is the ultimate closure to a lifetime of hard work," a jubilant Lassila told the Nine Network.

"I've been in some pretty dark places and through some tough times.

"I knew I could do it, it was just a matter of pulling it off."

"I'm just so happy I landed two jumps today," the 28-year-old added.

"I have done everything to plan, everything has worked to plan. It's a credit to the team around me. I couldn't be happier."

Australian veteran Jacqui Cooper was fifth, while compatriot Liz Gardner crashed on both jumps in the final and finished 12th.

It is Australia's second gold medal of the 2010 Games and third overall medal, making it the biggest haul by Australia at a single Winter Olympics.

Lassila is the second Australian to win gold in the event in three Winter Games, after Alisa Camplin's triumph in 2002.

"It's amazing, and it's a credit to our program. We couldn't do it without the support of the Australian government," Lassila said.

"I can't believe this, but I've done it and that's all that matters right now."

With five days of competition remaining, Australia is now 13th on the medals table with two golds and one silver.