The London Organising Committee of the Olympic and Paralympic Games (LOCOG) will brief the successful agency to create a character that reflects the Games' ‘Best of British' ideal.
It is set to be used on clothing, in film and animation, on gaming and digital platforms as well as in a physical form.
The agency will also be expected to develop a full marketing and communications plan to support the launch of the mascot.
A separate mascot will be created for the Paralympic Games, which begins on the 29 August, three weeks after the Olympic Games close.
Chris Townsend, commercial director of LOCOG, said: "They (mascots) help set the tone for the Games and we're very excited about kicking this process off.
"Fun and games aside, the mascot programme will be a key component of our licensing plan and will be a strong revenue driver as we seek to raise the £2 billion required to stage a Games in 2012."