Sajjad Khan, the European member of parliament (MEP), tipped Malala for the Sakhorav peace prize for championing women's rights to education despite fresh threats against her life by the Taliban, the Associated Press of Pakistan (APP) reported.
Malala, 16, was shot in the head by two gunmen as she sat on a school bus in her hometown. The teenager was targeted by the Taliban in an effort to silence her vocal support of promoting education for girls.
However, instead of silencing the brave girl, the shooting drew immediate outrage and condemnation in Pakistan and internationally. Malala was flown to Britain for medical treatment and she now continues to speak out and campaign against the Taliban and its policies, particularly against women.
Malala is also hotly tipped for the Nobel Peace Prize this year.
"Malala's courage, determination and defiance to speak out against one of the world's most violent and oppressive regimes is truly inspiring. It is only fitting that she is awarded the EU Sakhorav prize for Freedom of Thought on the anniversary of the attack which almost killed her," Khan said.
"She continues to defy the Taliban and will not allow them to stop her championing girls' rights to education even with their renewed threats.
"At the age of 16, her towering achievements have already made her a giant amongst men and she will be considered as one of humanity's greatest living heroes alongside Nelson Mandela. I strongly support Malala's cause and her message is not just for the girls of the Swat valley, it is a message for us all," he added.
The winner of the Sakhorav prize will be announced Oct 10, and the $50,000 prize will be awarded at Strasbourg in France Nov 20.
Malala Yousafzai was Tuesday awarded with the Pride of Britain award which was presented to her by David Beckham. She is also hotly tipped for the Nobel Peace Prize this year.