George "Johnny" Johnson was 22 when he took part in the 1943 air raid using experimental bouncing bombs in Germany.
Despite being nominated for the New Year's Honours list this year, the 95-year-old was omitted.
Oliver Koehler, from the Dambusters Museum in Germany, said "of course" he should be honoured. Carol Vorderman has also petitioned for him to be knighted.
A 237,000-signature petition calling for Mr Johnson to be knighted was taken to No 10 by Carol Vorderman and Gulf War veteran John Nichol in January.
It followed  a petition by campaigner Paul Walmsley, who also wanted the recognition for the former airman.
Bomb-aimer Mr Johnson, from Bristol, joined the newly-formed 617 Squadron in March 1943.
Two months later, he was one of the 133-strong squadron who dodged anti-aircraft fire, power cables and mountainous terrain to drop the four-tonne skipping bomb on dams in the Ruhr Valley.
Codenamed Operation Chastise, eight of the 19 planes were lost, 53 men died and three were captured.
Despite Mr Johnson describing it as a "thrilling experience", he said he was "disgusted" Bomber Command had never been given its own campaign medal.
"I feel there's been no attempt to recognise the sacrifice these people made," he said.
But historian and author of Bomber Command, Max Hastings, said there was "an embarrassment" and "an uncertainty" about how the country "should look back on the bombing".
"I do think the reluctance to issue a campaign medal does reflect how controversial it is and the possible upset it could cause in Germany," he said.
But Mr Koehler said Mr Johnson was "courageous" and had been "ready at any time" to "risk his life" and should be honoured.
The Cabinet Office said it could not comment on individual applications.

Only 3.2mm of rain fell at Gogarbank and 4mm in the Botanic Gardens - 7% and 10% of the respective monthly average.
According to data from the Met Office Midlothian, Fife and Middlesex, were the driest historical counties this month with just 12% of the rainfall expected in April.
Sutherland was the wettest part of Scotland with 36% above average.
The UK as a whole experienced just 47% of the expected rainfall.
Scotland was the wettest area of the UK with 65mm and southern England the driest area with 16mm.

Imtiaz Ul Haq, 58, suffered serious knife wounds to his throat during the attack at the Costcutter convenience store in Queensferry on 8 December
At Mold Crown Court on Monday, Matthew Liam Whelan, 29, from Mancot, denied attempted murder but admitted both wounding with intent and robbery.
Leslie Peter Baines, 47, of Connah's Quay, denies the robbery charge.
A trial date has been set for 22 May, however the prosecution has been asked to consider if it wishes to proceed with an attempted murder charge against Whelan or accept his guilty plea to the other offence.
Both men were remanded in custody ahead of a pre-trial hearing in April.
A museum in Germany is calling for the last surviving British member of the Dambusters to be honoured.
[NEXT_CONCEPT]
Edinburgh was the driest place in the UK in April despite Scotland as a whole being the wettest.
[NEXT_CONCEPT]
A man accused of trying to kill a Flintshire shopkeeper in a robbery has admitted a wounding charge.