Britain's Olympians and Paralympians are to get their own honours list, rather than simply being included in the New Year's Honours.
David Cameron has decided to place awards arising from the London 2012 Games outside the usual system.
There has been no official confirmation of a separate honours list but Whitehall sources have told the BBC it will happen.
They said it would reflect the scale of achievement by British athletes.
The 29 gold medals at the London games and more than 100 medals so far at the Paralympics had raised expectations that champions such as Jessica Ennis, Mo Farah, Sarah Storey and Ellie Simmonds would be recognised.
The prime minister's official spokesman said no official announcement would would be made at this stage.
But he added: "The prime minister is very keen to recognise people who contributed to the very successful Olympics and Paralympics."
Johnnie Peacock who won the T44 100m said he was pleased by the decision.
Mr Peacock said: "That is good news. It's good to hear that he's obviously supporting everything and you know this country really has pushed the Olympics and Paralympics and they really are getting behind everyone so it's great to see the support that even he's given."
Dame Tessa Jowell, the former Labour Olympics minister, has also welcomed the move.
"Like any system, of course it should constantly be kept under review and make sure that its rules and the people who are being honoured are the people who reflect just dessert in the broader country," she said.
There was also general support among spectators attending events at the Olympic Park on Friday for a separate honours list.
Sam Morgan, who is from Australia but now lives in London, said: "I guess the hardest thing is to decide who is going to get the honours.
"Difficult to say whether it should just be the gold medallists or all the people who have put in so much work."
Adrienne Hughes, from Suffolk, said: "I think it's a good idea as long as they have some of the Games Makers in that list.
"They are all so lovely, so helpful and smile and the separate list would be brilliant if they do that."
Speculation that Britain's Olympic heroes would miss out on honours was triggered last month by a senior civil servant, Jonathan Stephens, who told the BBC medals would not mean an "automatic gong".
Honours are awarded for exceptional achievement or service, twice every year - at New Year, and in mid-June - and are decided by a Whitehall committee and not the government.
The sport committee, which is chaired by Olympic chief Lord Coe, is strictly limited as to the number of gongs it can award per year.
Baroness Grey-Thompson - herself an 11 time paralympic gold medallist - and sits on the sporting honours committee previously told the BBC that they were able to award "one or two" knighthoods, a "few more" CBEs, "more" OBEs and "up to 45-50 MBEs".
By giving Olympic and Paralympic athletes their own honours list Downing Street can ensure that there is no limit on the number of awards handed out.