The ex-three-quarter won 30 caps for his country between 1973 and 1979 - winning two Grand Slams - and starred for Lions on their tours to South Africa in 1974 and New Zealand in 1977, earning himself the nickname 'the Welsh Whippet'.
The 64-year-old told Press Association Sport: "Receiving the MBE is right up there with all the things I achieved during my playing career. It is very special and I was tremendously excited when I found out I would receive the honour."
Williams was also part of the Llanelli side that wrote itself into Welsh rugby history by defeating the all-conquering New Zealand All Blacks 9-3 at Stradey Park 40 years ago.
Williams was a master finisher in his playing days, and is regarded as one of the finest three-quarters to wear the three feathers on his chest.
Many of his team-mates from that golden era of Welsh rugby - such as Gareth Edwards, John Dawes, Graham Price and JPR Williams - had already been honoured, but Williams admits it has been worth the wait.
He added: "A lot of the players I played with in the 1970s received honours at the time and I thought maybe my chance had gone. But to have received this honour later in my life means I will cherish it that little bit more and it is very, very special for me and my family."
As well as his well-documented services to rugby, Williams' MBE also recognises his services to charity. He helped set up the Welsh Rugby International Players Benevolent Association, to assist those who struggled after their playing careers had finished, something he has found to be rewarding.
Williams, who also runs a painting business, said: "I am particularly pleased that the charity work I have done is also a part of this, and I hope it has played a big part in it because it is something that is very important to me."
"The setting up of the Welsh Rugby International Players Benevolent Association has helped a lot of players who have suffered illness or injury in later life, and it is help that was needed as it was an amateur game when they played."