But author Lynette Silver has clung to the belief for years that an ancestor, William Tipple Smith, found gold there three years earlier but had been robbed of his place in history.

She has now been proven correct with official recognition.

Mr Smith died a broken man in 1852 and the slur that he tried to defraud the government was his reputation for years.

Mr Hargraves, though became famous, rewarded and recognised as the first man to find a payable goldfield in Australia.

The Ophir was quickly emptied of its riches once diggers flocked to the site in 1851 upon news of Mr Hargraves' find.

But descendants of Mr Smith have long believed there was a lot more to the story.

Ms Silver, his great, great, great grand niece, has spent years searching through historic records to uncover the truth.

She wrote a book on her finds in 1986.

However despite praise in historical circles it took until last week for the state government to officially and publicly recognise that Mr Smith, who found gold at Ophir in 1848 when it was known as Yorkey's Corner, was the true hero.

A headstone was installed at his previously unmarked grave at Rookwood Cemetery stating he was "Discoverer of Australia's first payable gold." It also recognised his efforts in starting Australia's first iron and steel industry at Mittagong in 1848.

The headstone was paid for the state government, Bluescope Steel, the cemetery and private donations.

Ms Silver said Mr Smith had told the government of his find in 1848 but no acted on his claim. However, interest ignited following the California gold rush in 1849.

She said the Colonial Secretary privately tried to find Smith's goldfield and buy the land at Ophir to hold the rights to minerals found on the land. "Everybody was keen on getting hold of the land," she said.

Mr Smith appealed to the government, but in what Ms Silver calls a cover-up for their inaction, officials branded him a liar and alleged he had gained his gold in California much later than he had found it at Ophir.

Ms Silver said letters of appeal from Smith were mis-filed and it took her years of research to find the proof.

She said Mr Hargraves relied on help from workers who saw Mr Smith in the area to find the source of the gold.

Ms Silver said she was pleased for the family, including Mr Smith's great, great, great grandson Bill Hamburger, 91, who had long maintained Mr Smith's story was true.

"Things move very slowly in history circles," she said.

"Once you get a story entrenched, like Hargraves found the gold, it is very hard to move."