This dainty little yellow fungus is Omphalina chromacea, common name Yellow Navel, from family Tricholomataceae. Pronunciation is Omfa-lee-na crow-may-see-ah.
There is an oddity associated with this species: it grows in conjunction with a mat of green algae on the ground. It is commonly found amongst bryophytes (mosses, liverworts and hornworts), or on bare ground, but the alga is always present. It is thought by some mycologists that it is likely Omphalina chromacea may be the fungal component of a lichen (a symbiosis between an alga and a fungus). The alga is most likely Coccomyxa.
Young Omphalina chromacea with down-turned scalloped rim
Caps can be up to 25mm diameter, and start out convex (domed) with wavy or grooved margin, with a central depression. As the fungus matures, the cap flattens and then becomes funnel-shaped.
Gills are decurrent (running partway down the stem), and are yellow. The central stem can be up to 20mm high by 2mm wide. Spore print is white.
Omphalina chromacea is found in native forests in south-eastern and south-western Australia, often on the sides of tracks and banks where there has been disturbance.
Following the June 2007 Hunter Valley floods, I found many groups of Omphalina chromacea in Werakata National Park in the lower Hunter where the ground had been extremely wet. A mat of green algae was surrounding all I observed.
Omphalina chromacea amongst moss
My sightings of Omphalina chromacea
[This will be updated with new sightings]
Werakata National Park, NSW - In and on the edges of Leptospermum and Eucalyptus forest: Jul, Aug, Oct, Jun 2011, Jul 2011.
Cassilis, NSW - Under scattered Eucalypts: Jul.
The green algal mat is very obvious