Gillard, in New Delhi India, made the announcement among children playing cricket in a slum.
The medal will be presented to Tendulker in person by Labor Party MP Simon Crean when he visits the sub-continent in the coming months.
Tendulker, hugely popular with Australian crowds, is the third non-Australian cricketer to get the honour, after West Indies legends Brian Lara and Clive Lloyd –Sir Garfield Sobers is also an AM, but is an Aussie citizen through marriage.
“This is a very special honour, very rarely awarded to someone who is not an Australian citizen or an Australian national,” PM Gillard said.
“(It is) a very special recognition of such a great batsman.
“Cricket is of course a great bond between Australia and India. We are both cricket-mad nations.”
Rather than applauding the ‘Little Master’, Australian fans and commentators have taken to social media in protest.
On Twitter, News Limited’s chief cricket writer Malcolm Conn wrote: ‘How can PM Julia Gillard award Tendulkar an Order of Australia after his central role in the Monkeygate racism scandal?’
Many believe Tendulkar acted inappropriately in 2008 when he changed his story to help to minimise the punishment of controversial spinner Harbajan Singh, who was accused of calling Australian player Andrew Symonds a monkey.
With racism in sport such a huge issue, it was a chance for the most popular cricket in the world – by virtue of being the most popular player in India – to make a stand.
‘The Indians got him off the hook when they, of all people, should have been treating the matter of racial vilification with the utmost seriousness,’ Adam Gilchrist wrote in his book.
Tendulkar has played 106 matches against Australia, more than any other player.
India’s tour of Australia this summer gone was almost a sideshow for the final time Aussie crowds were likely to see him play there, with crowds just as keen to see him score his 100th century as for Australia to win.
Tendulkar is currently playing for Mumbai Indian in the ICC T20 Champions League in South Africa.
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