On receiving the trophy, Lydiate commented: "I am really surprised to be honest. I am genuinely chuffed to bits.
"It tops off an amazing competition for me and for Wales. To be part of such a talented Wales team and to win the Grand Slam in Cardiff on Saturday was incredible in itself, but to then be voted Player of the Championship is absolutely unbelievable.
"It is a massive honour to win, especially given the quality of the other players up for the award. Thanks to everyone who voted for me, it means a lot."
The 2012 RBS Player of the Championship was decided as a result of a public vote, hosted on www.rbs6nations.com.
The shortlist was compiled of winners of the RBS man-of-the-match award chosen by the host broadcasters from the first four weekends of the Championship
Lydiate had been named man-of-the-match in Wales's game against Scotland in the second round of the Championship.
He also received the honour for his stand-out performance against France last Saturday as Wales sealed their third Grand Slam in eight years.
Lydiate won his Player of the Championship award securing over 25% of the vote, with Ireland out-half Jonathan Sexton coming home in second place with 12%. Sexton was closely followed by Italian captain Sergio Parisse in third (11.6%).
2012 RBS PLAYER OF THE CHAMPIONSHIP POLL:
1 - Dan Lydiate (Wales)
2 - Jonathan Sexton (Ireland)
3 - Sergio Parisse (Italy)
David Denton (Scotland)
Donnacha Ryan (Ireland)
Yoann Maestri (France)
Sam Warburton (Wales)
Alex Cuthbert (Wales)
Mike Phillips (Wales)
Ross Rennie (Scotland)
Imanol Harinordoquy (France)
Julien Malzieu (France)