Park Jong-woo, who has yet to receive his bronze medal, was described as "courageous" by the chief of South Korea's Military Manpower Administration (MMA), local media reported on Friday.
"I think Park has met all legal requirements for the exemption," Kim Il-saeng told the parliamentary committee on national defence.
"I don't foresee any problems with his case."
South Korean men between 18 and 35 are required to complete two years of military service.
Athletes who win Olympic medals, Asian Games gold or accomplish other notable sporting achievements are exempted and only required to do four weeks of basic training.
Park held up a sign referring to a territorial dispute between South Korea and Japan while celebrating a 2-0 win over their fierce rivals in the Olympic bronze medal match.
The placard - which read "Dokdo is our territory" - triggered further controversy following a surprise visit by South Korean President Lee Myung-bak to the islands, known in Japan as Takeshima, before the game earlier this month.
Park's act, described as "impulsive" by the Korea Football Association, got him banned from the medal ceremony at Wembley, and his name was not announced over the public address system.
Kim said the Sports Ministry was "in the process of recommending" Park for the exemption, according to South Korea's Yonhap news agency.
He added: "I personally think he is a courageous and an admirable player."
Soccer's world ruling body FIFA opened disciplinary proceedings against Park.
The disputed islands, controlled by South Korea but also claimed by Japan, lie equidistant from the two countries and are believed to contain frozen natural gas deposits potentially worth billions.