The elite soldier codenamed Person 66 was called to the witness box on Monday by the news outlets the Victoria Cross recipient is suing for defamation.
But he objected to questions about a 2012 mission in Afghanistan in Syahchow due to "self-incrimination" his lawyer described was "of the gravest kind".
The young trooper allegedly executed an unarmed Afghan prisoner under orders from his patrol commander Mr Roberts-Smith who is accused of "blooding the rookie".
Mr Roberts-Smith, 43, is suing The Age, The Sydney Morning Herald and The Canberra Times over reports claiming he committed war crimes and murders in Afghanistan between 2006 and 2012.
Australia's most decorated living war hero denies all the claims against him, while the media outlets are defending them as true.
Nicholas Owens SC - representing the newspapers - said proving the Syahchow incident alone was crucial for their case and argued Person 66 should be compelled to speak.
"It is ... possible that I could win this case by only proving the murder at Syahchow."
"It is an independent path home to victory."
Person 66's barrister Jack Tracey said his client ran the risk of prosecution in the International Criminal Court and an unfair trial at home if charges were to eventuate.
He also presented documents to the court pertaining to his mental ill-health.
"(The) effect of giving evidence in this proceeding would put his wellbeing and life at risk," he said.
But Mr Owens disagreed that Person 66's evidence in the defamation trial could legally lead to international prosecution, and offered to hear it in closed court.
The only other SAS witness who objected to speaking about another alleged execution, even granted a certificate of immunity from Justice Anthony Besanko, was Person Four.
Mr Owens did not compel Person Four to speak about the alleged war crime he is said to have carried out, saying there were other witnesses to that event to create the "rich mosaic" Justice Besanko could make findings from.
But only the evidence from Person 66 would explain the circumstances of how those at Syahchow were killed in action, Mr Owens said.
Mr Roberts-Smith earlier testified insurgents were shot within the rules of engagement during that mission, and flatly denied ordering Person 66 to shoot an Afghan prisoner.
Justice Besanko is due to hand down his decision on Wednesday afternoon.