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A hug employing both arms and legs. Usually Affectionate. Sometimes Awkward.
"I love when I wake up in the middle of the night because you're koala hugging me."
"Uh. That bitch koala hugged me in the middle of the classroom. It was awkward."
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When a person wraps their limbs around their significant other while penetrating them from behind during sexual intercourse, while also speaking to them in an Australian accent
Person 1: Dude last night was amazing, I did the Australian Koala Hug on my girl and she was totally into it
Person 2: No way bro!
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When one person, usually the girl, wraps their legs around the hips of the guy.
"Did you see Sam koala bear hugging that guy?"