Staff and volunteers at Donna's Dream House on Highfield Road will be presented with the Queen's Award for Voluntary Service by her representative, the Lord Lieutenant of Lancashire.
Bosses at the Dream House, which provides free holidays for terminally ill children and their families, have even been invited to meet the Queen at a Royal Garden Party later this summer.
Len Curtis, who set up Donna's Dream House with wife Barbara after daughter Donna tragically died from cancer, said he would accept the award on behalf of everyone who gives their time and support to the charity.
He said: "Winning the Queen's Award is an honour and a testament to all the hard work of the numerous volunteers we have here at the Dream House.
"I am delighted that work has been recognised, on behalf of the whole community and the people of Blackpool working together for terminally-ill children.
"Without all the help of the Dream House volunteers, including the community service workers, we would not be able to do the work we do and give so many children a very special holiday by the sea."
The Dream House has been specially kitted out to delight young children who are too ill to travel abroad but still deserve a unique holiday with their parents.
The charity transformed a derelict building into a kids haven with four themed apartments to enchant their guests and is currently doing up a neighbouring building to create a centre for sick teenagers.
Up to 400 people have benefited from the holidays this year and another 174 local people have sought bereavement counselling at the charity's Snowdrop Centre.
Len and Barbara will be joined by trustees Violet and Walter McIntyre at Buckingham Palace on July 11 after picking up the award from the Lord Lieutenant, Lord Shuttleworth, in Preston on July 10.
Donna's Dream House is one of only 104 charities to get The Queen's Award for Voluntary Service this year in recognition of our communities' unsung heroes.
Ed Miliband, Minister for the Third Sector, said: "I congratulate the winners of the Queen's Award and pay tribute to the brilliant work they do.
"These groups show us how much can be achieved when people join together to make a difference. They are an example to us all."
The nominations for next year are already open to the public and organisers hope anyone who knows a group making a difference in their community will put them forward.
Nomination forms for the 2006 Queen's Award for Voluntary Service are available from www.queensawardvoluntary.gov.uk or by calling 0845 000 2002 .
heather.butler@blackpoolgazette.co.uk