He was shot dead on Saturday night by insurgents while on patrol in the Mirabad Valley.
Prime Minister Julia Gillard says in honouring Sapper Larcombe she honours all engineers for their critical work.
Opposition Leader Tony Abbott says Australia is mourning another fine soldier.
Defence Minister Stephen Smith says Sapper Larcombe's death is another terrible blow for the nation and another tragedy for an Australian family.
MPs have stood in silence as a tribute to the fallen digger.
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