A permanent memorial to honour the victims and heroes of last month’s Sydney siege will be built at Martin Place, New South Wales Premier Mike Baird says.

Mr Baird said the memorial would honour the victims, hostages, police and emergency service workers caught up in the siege, which ended in the deaths of two people after more than a dozen were taken captive last month.

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The memorial has not yet been designed, but will include a garden incorporating compost from the thousands of floral tributes left in Martin Place in the days after the siege.

A Martin Place Siege Memorial Committee, chaired by the Department of Premier and Cabinet, will develop the designs in consultation with the City of Sydney council, surviving hostages and the families of Tori Johnson and Katrina Dawson, who were killed in the siege.

Mr Baird said the memorial would be built by the first anniversary of the attack.

“The outpouring of grief that was symbolised by a sea of flowers in Martin Place, and that moved hearts around the world, was the beginning of our recovery process,” Mr Baird said in a statement announcing the memorial plans.

“The unveiling of a permanent memorial, on or before the first anniversary of the siege, will be another significant step in that process, and will guarantee that the memory of Tori and Katrina lives forever in the heart of Sydney.”

A police investigation is continuing into the events that took place during the siege, which began when gunman Man Haron Monis took customers and staff hostage inside the Lindt cafe on December 15.

A coronial investigation is yet to determine exactly how the two hostages died in the final minutes of the 16-hour ordeal, which ended with a shoot-out between police and the gunman, who was killed.

Sydney Lord Mayor Clover Moore said a permanent memorial was a fitting way to honour the lives lost, the hostages’ bravery and the work of emergency services, as well as the compassion of Sydneysiders.