Healy, an Olympic champion in the 4x200 metres relay at Stockholm 1912, is known as the only Australian gold medallist to die in combat.

He was gunned down at the Somme in France on August 29, 2018, during World War One.

The creation of the award by the AOC is to mark 100 years since his death.

As well as his Olympic title, Healy is also known for a remarkable act of sportsmanship in Stockholm.

He denied himself an almost certain individual gold medal in the 100m freestyle by insisting race favourite Duke Kahanamoku be allowed to compete after a mix-up saw the American miss his semi-final.

Officials agreed and a special semi-final was held, and Kahanamoku progressed and eventually won gold.

Healy had to settle for silver but said any victory without the American competing would be tarnished.

"It's appropriate that 100 years since Cecil was killed that we perpetuate the great example he set," said AOC President John Coates. 

"His family is gathering in France this weekend for the special homage to Cecil at the war cemetery at Assevillers.

"That's a wonderful gesture from the French and we believe as Australians there's a great benefit in understanding and celebrating the values that Cecil held that led to that incredible gesture in 1912. 

"What an example he set for us all."

The award will be considered after each Olympic Games but it will only be presented if an athlete has shown "exceptional" sportsmanship.