Thousands of devotees of the Hackney-born singer will flock to the memorial which will be unveiled in time for the anniversary of his death.
Bolan was killed when his car hit a tree on Barnes Common on 16 September, 1977.
It was feared over-zealous fans would deface the marble wall tablet but crematorium bosses have given permission for it to be erected.
Members of the T-Rex Appreciation Society have launched an appeal to pay for the pounds 2,000 memorial, which will be housed in the Cloister Court of the crematorium.
It will be made of white marble and carry the inscription 'much loved and missed by his fans and all those whose lives he touched.
Paul Johnson, secretary of the society, said: 'This will be a focal point for us. Marc touched the heart of his fans and his music was a way of life.
Admirers of the rock idol have campaigned for the tablet as a more elegant and lasting memorial to their hero rather than the existing tree bearing a commemorative plaque.
Contributors will receive a commemorative parchment scroll and names will be printed in a memorial booklet. Fans donating pounds 5 or more will receive a previously unreleased T-Rex single.
Mr Johnson added: 'We have waited about five years for this. In the early days there was a lot of hysteria but over the years it has died down and the crematorium has recognised this.
Chris Johns, a general manager for the London Cremation Company, which owns the crematorium, said: 'There have been problems in the past with souvenir-hunters stealing the plaque.
'However, it has been agreed that the new memorial can go ahead.
Bolan's influence as an early Seventies superstar and heart-throb is beyond doubt. He was an inspiration for artists as diverse as Gary Glitter, the Sex Pistols and Marc Almond. His British chart-topping singles included Hot Love and Get It On.
Contributions can be sent to the T-Rex Appreciation Society at PO Box 297 Newhaven BN9 9NX.