The 1.5 litre, five-door, five-seat Daihatsu now holds the title of: 'Compact/Affordable Category Winner', awarded by the UK's4x4 magazine.
The Terios beat all major rivals such as the new Fiat Sedici 4x4, smaller Fiat Panda 4x4 and even larger and more expensive all-wheel drive models such as the Volkswagen Golf 4Motion.
Key criteria for the judges were a car which combined practicality with driving enjoyment, value for money and "of course" genuine off-road character.
The magazine editorial said: "We like our 4x4s to have some off-road character in their styling, and in this little group the Terios stands out as the only one that evokes any image of wild-country adventure."
Road testers from 4x4 magazine went on to praise the Terios's "fresh and funky styling" and "compliant off-road ride and impressively stable handling when driving on tarmac."
And they added: "The engine's long-stroke design enhances its torque delivery, which we experienced to good effect when faced with a steep climb that we were convinced could not be scaled without low-range gearing.