The elaphrosaur, whose name means "light-footed lizard", was related to the Tyrannosaurus Rex and Velociraptor.
The five-centimetre (two-inch) vertebrae fossil was discovered during a dig near Cape Otway in Victoria in 2015.
It is the first elaphrosaur bone ever to be found in Australia.
The fossil was discovered by volunteer Jessica Parker, who was taking part in an annual dig led by Melbourne Museum.
At the time, it was thought to be from a flying reptile called a pterosaur. But when palaeontologists at Swinburne University in Melbourne studied the fossil further, they realised it was a delicately-built dinosaur.