Lundy made the light-hearted wager ahead of the London Games with Britain's Hugh Robertson, who faced the penalty of putting on a Kookaburra hockey shirt and dribbling a ball around the Australian high commission in central London.
She admitted defeat after a night of winning performances by British cyclists in the velodrome that helped take the British gold tally to 22, the best outcome since 1908 and well ahead of Australia's four. Five days remain in the Games.
"I have cheerfully conceded that I think I will be rowing this time round," Lundy said, sitting alongside Robertson in one of a number of appearances on morning televisions shows in London.
The two countries enjoy a keen sporting rivalry, perhaps most fiercely in the Ashes cricket series that dates back over a century.
Lundy said Australia had still gained a "swagful" of silver medals but had been continually pipped at the post by British rivals.
"So many of our silver medals have been to British gold and we are learning very fast what a millimetre or a millisecond feels like," she added.
Robertson said he would not claim victory before the Olympics ended on Sunday but acknowledged the lead over Australia looked "promising".
He attributed some of Britain's success to increased sports investment from money raised in the country's national lottery.
"That means not only that we can innovate but we can keep our athletes pretty much permanently in training, we can attract the best coaches, we can put the right structure round them," he said.
Britain finished two places above Australia at the last Olympics in Beijing, ahead for the first time since the 1988 Seoul Games.