Sasha, a four-year-old Labrador, was trained to find explosives and was killed alongside his handler Kenneth Rowe in July 2008.
The brave dog will be awarded the PDSA Dickin Medal as a posthumous honour.
The PDSA said in a statement: ‘Sasha's determination to search and push forward - despite gruelling conditions and relentless Taliban attacks - was a morale boost to the soldiers who entrusted their lives to her weapon-finding capability.’
‘On one occasion recalled by regimental colleagues, Sasha was searching a building in Garmsir when she detected two mortars and a large quantity of weaponry, including explosives and mines. This find alone undoubtedly saved the lives of many soldiers and civilians.’
Sasha and her handler Kenneth were considered the best team at detecting explosives in the region of Afghanistan where they operated.
The Labrador has been credited for saving the lives of ‘scores’ of soldiers and civilians.
PDSA director general Jan McLoughlin said: ‘We are extremely proud to be awarding a posthumous PDSA Dickin Medal to Military Working Dog Sasha, which is the highest award any animal can receive for lifesaving bravery in military conflict.’
‘The award is even more poignant as we approach the centenary of World War One and are reminded of the huge debt we owe the animals who serve in times of conflict.’
She continued: ‘Sasha's exceptional devotion to duty in Afghanistan saved many lives, both soldiers and civilians.’
‘This medal, recognised worldwide as the animals' Victoria Cross, honours both Sasha's unwavering service and her ultimate sacrifice… Her story exemplifies the dedication of man's best friend and reminds us all of the amazing contribution they make to our lives.’