Australia took on Denmark in the third place decider, despite topping Group C in the invitational tournament, based on points rankings.

The result ends a strong campaign where the Matildas lost to Sweden narrowly in their opener, before wins over the Netherlands and China in the group stage - Australia's best finish at an Algarve Cup.

It was the Matildas who took the lead when Kyah Simon opened the scoring on 36 minutes.

Simon poked home after a good run from midfielder Katrina Gorry.

Matildas keeper Lydia Williams made a crucial save last in the first 45, when Sanne Troelsgaard was through on goal.

Both sides made two substitutions at the break, with Kyah Simon coming closest after the interval with a dipping shot going just over the crossbar.

Emily Van Egmond let fly, while Kyah Simon and Alanna Kennedy both had chances as Australia ramped up the pressure in the second half.

Polkinghorne cleared a Denmark chance after Williams was beaten in a warning sign before the equaliser on 80 minutes.

Pernille Harder produced a moment of magic, flicking the ball up before shooting into the top corner to make it 1-1.

Harder also forced a good late save from WIlliams before the game went to penalties after 90 minutes.

Denmark went first and raced to a 2-1 lead, before Polkinghorne's low shot was saved by Danish keeper Stina Lykka-Petersen.

Williams was sent the wrong way by Stine Larsen to make it 3-1, before Kerr's spotkick was also denied by Lykka-Petersen.

Troelsgaard finished the job for Denmark, winning 4-1 on penalties.