Prime Minister Scott Morrison on Monday announced he had recommended to Queen Elizabeth that Ordinary Seaman Sheean be bestowed the highest military honour for his brave actions in World War II.

This was after an expert panel convened by Mr Morrison had found new and compelling evidence that the Latrobe-born member of the Royal Australian Navy had died in battle with Japanese aircraft while on the HMAS Armidale on December 1, 1941.

Mr Watson said nominations for the Victoria Cross needed to be supported by signed statements from at least three witnesses.

There is only one survivor of the HMAS Armidale - Ray Leonard.

"It is a very strict procedure and there has to witnesses to vouch and testify for the application, many of which are not approved, perhaps receiving a distinguished service medal instead or lesser awards," he said.

"Few naval men have been awarded a VC, so Sheean's award will be another distinction."

The expert panel's report to Mr Morrison was particularly damning of the 2013 Valour Inquiry by the Defence Honours and Awards Tribunal which recommended against a posthumous award.

It said the inquiry was heavily influenced by a government policy which opposed retrospective awards.

It said the ensuing report was hastily written and failed to identify a number of significant points regarding Ordinary Seaman Sheean's actions.

The expert panel said the 2013 inquiry relied heavily on the Report of Proceedings from HMAS Armidale commander David Richards which it said constituted an error of judgment.

"Several witness statements added essential information that was omitted from the ROP, and in parts contradicted it," it said.

"The ROP was both incomplete and, in part, inaccurate."

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