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The monument will be the first in the UK to remember the millions of Muslims who served in the British Armed Forces during the conflicts.
“It is only right that those who have given their lives for our country are recognised and honoured by a prominent national monument and that the public is able to learn more about the sacrifices made by these brave men and women for our country.”
Minister of State for Defence Baroness Annabel Goldie has also shown her support for the initiative.
Muslim service personnel played a significant part in Britain’s Armed Forces during both World Wars and subsequent conflicts.
However, the National Muslim War Memorial Trust (NMWMT) said their heroic contribution has “not been given the public recognition it deserves”.
The charity, which aims to educate school children and adults about the contributions of Muslims, said it was committed to maintaining the memorial after a location in the capital has been agreed with the government.
Seven soldiers were awarded the Victoria Cross, including Khudadad Khan VC who was the first non-white person to get the medal in 1914.
Six have received the George Cross, including Captain Mateen Ansari GC and Noor Inayat Khan GC, who was given the medal posthumously in 1949 .
Ms Khan was the first woman wireless operator sent by Britain to assist the French resistance. Despite being captured and tortured in a Nazi concentration camp, she never gave up any secret information.
Lord Mohamed Iltaf Sheikh, chairman of NMWMT, said: "We very much hope to draw attention to and get more public recognition for the sacrifices made by Muslim personnel in the British Armed Forces. I am grateful for all the support our campaign is getting.
“The support of the London Mayor is particularly significant as the first memorial will be located in the capital.”