I have got a full uk driving licence but when I have been looking it seems so expensive to buy or rent a car. Would it be a lot cheaper to rent a motorbike and do I need any special licence? Or could I ride a 125cc on my car licence

You can only ride a 50cc bike on a car licence. How long are you going to be here? Buy a cheap secondhand car for $1000 and sell it when you leave - just make sure it has a valid roadworthy certificate.

I will be coming for 1 year on a whv, then hopefuly get a skilled migration visa

would it be cheaper for me to rent a car while in Australia or buy an old cheap run around? as i have heared that second hand cars are quite expensive

You can pick up a usable car for $1500-$2000 and sell it for around $500 less after a year: you'd be hard pushed to hire anything for less than $20 a day and most will be nearer $40 for a Getz or similar. Of course if you buy a car you will also have to pay rego and insurance, but you will still come out on top.

whats rego?
and im guessing insurance would be quite expensive for a 23 yr old, but i guess thats what my savings r for

Rego = registration fee (sorry for the local slang!) which varies state to state but will be in the $500-$700 range for a year. This includes compulsory third party (CTP) insurance which covers you against injuring a person but does not cover against damage to property - that is the additional insurance you should take out. No point in paying to cover your own car as the premium is likely to be more than the value of the vehicle.

Also worth joining a local equivalent of AA or RAC - there is a different one in each state but they all provide country-wide coverage.