The Prime Minister will jet to America this autumn to pick up the award - months after walking out of Downing Street.
He will receive a formal invitation to the US Congress in Washington from new Democrat Speaker Nancy Pelosi.
Informal discussions have already taken place over the last few weeks between the Prime Minister’s private office and the Congressional Speaker’s senior aides.
Two members of her team have travelled to London to carry out face-to-face talks with Labour Party officials.
The visit will be carefully orchestrated to “re-launch” the Prime Minister in America after he leaves office.
Mr Blair will address Congress, receive his award and then embark on an extensive speaking tour that could earn him millions of pounds.
A spokeswoman for Mrs Pelosi, the Speaker of the House of Representatives, told the News of the World: “The Speaker is looking forward to welcoming Mr Blair to Washington later this year.”
The trip is expected to see the launch of a Blair Foundation, which will work for the Prime Minister after he leaves office.
The plans are being overseen by Martha Greene, the American businesswoman who is a confidante of the Prime Minister and his wife.
A website, www.blairfoundation.org.uk, has been registered in Miss Greene’s name.
Margaret Thatcher also set up her own foundation after leaving office in 1990, while John Major went to work in the City.
Gordon Brown has also been told of the medal plan.
He has secretly given his approval - as the trip is expected to coincide with the Labour Party’s autumn conference.
That will avoid any clash between the pair at what is expected to be Mr Brown’s first conference as Labour Party leader.
He is desperate to avoid a repeat of last year, when apparently sarcastic comments from Cherie Blair overshadowed the Chancellor’s keynote speech.
A former aide of the Prime Minister who will be involved in “relaunching” Blair in America revealed: “We need to stay out of the picture once he leaves Downing Street.
“Like his speech at the Labour Party Conference, he will go out of the door leaving some people wanting more.
“And that means no looking back - time in America will help him to get everything established and work out what he is going to do next.
“And it will mean the next leader can get on with the job without having someone looking over their soldier like Thatcher did.”