From The London Gazette online:
King George VI awarded the people of Malta the George Cross [on 15 April 1942] in recognition of their continuing and heroic struggle against repeated and continuous attacks during World War 2.
Malta holds the record for suffering the heaviest, sustained bombing attack of WW2—154 days and nights and 6,700 tons of bombs. During the entire time, the island’s population of 270,000 were unerring in their refusal to capitulate.
On April 7, 1942, Malta had sounded its 2,000th air-raid alert of the war.
At the time, Malta was a Crown Colony of Britain. Today, it is a republic and member of the Commonwealth.
Malta's lag bears in its canton a representation of the George Cross.
The online version of The London Gazette, an official "journal of record" of the British government, provides further context:
The George Cross was instituted by King George VI in September 1940 as a replacement for the Empire Gallantry Medal, and as a civilian equivalent of the Victoria Cross (Royal Warrant, Gazette issue 35060). It was awarded for ‘acts of the greatest heroism or of the most conspicuous courage in circumstances of extreme danger’ and ‘which we desired should be highly prized and eagerly sought after’.
King George VI conferred the award by way of a letter in his own hand:
To honour her brave people I award the George Cross to the Island Fortress of Malta to bear witness to a heroism and devotion that will long be famous in history.
George R.I.April 15th 1942
The Governor, Lieutenant-General Sir William Dobbie answered:
By God's help Malta will not weaken but will endure until victory is won.