General Angus Campbell has written to a number of Afghanistan war veterans saying their honours for distinguished and conspicuous service could be stripped, the ABC has reported.
The proposition has landed on the desk of Defence Minister Richard Marles, who would need to make a recommendation to the governor-general.
The possible stripping of medals comes in the wake of investigations into potential war crimes carried out by Australian soldiers in Afghanistan.
Senior veterans' leaders are calling on the federal government to reject the recommendation.
Gen Campbell previously decided to strip unit citations from special forces troops who served in Afghanistan following the damning Brereton inquiry, which found evidence of war crimes.
But the move was blocked in 2021 by then defence minister Peter Dutton, who said only those convicted of war crimes would lose their meritorious citations.
RSL Australia said the organisation was advised Gen Cambell had written to at least seven officers and they were told the defence force chief was going ahead with the fresh push.
The RSL has said administrative action should be off the table until criminal charges are dealt with and the facts are established, in accordance with due process.
The organisation said the removal of war medals from veterans appeared to be unprecedented.
RSL national president Greg Melick said while there needed to be command accountability for any wrongdoings in Afghanistan, the facts had not yet been established in court.
"In the meantime, all involved have a right to a presumption of innocence," he said.
"We remain very concerned about the breadth and depth of the impact that this is having on the mental health of our veterans."
The Commando Association's Steve Pilmore said soldiers and veterans felt the system had turned its back on them.
"It feels to them like organisational betrayal," he said.
"Any punitive administrative action taken to remove awards or sanction veterans must be supported by evidence, it must be fair and considered, and individuals must be afforded due process."
A spokeswoman for the defence minister said he had received Gen Campbell's recommendations on command accountability and was "considering the recommendations and seeking advice as appropriate".
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