The ancient monument, which straddled Rhodes town harbour and stood 34 metres high, was toppled by an earthquake in 226BC.
But there are now plans to recreate the legendary statue with the help of German artist Gert Hof, the Guardian reports.
"It will be a unique architectural creation," said the islands mayor, Hatzis Hatziefthimiou, said.
"We want to make it a work of global appeal and significance."
The new Colossus will stand on outer pier in the harbour area of Rhodes, and be visible to passing ships, the paper said.
Built in part from melted down weapons, the new sculpture will be dedicated to celebrating peace.
It will also be bigger than the original, and will use light to "tell" a variety of stories.
"We are talking about a highly, highly innovative light sculpture, one that will stand between 60 and 100 metres tall so that people can physically enter it," Dr Dimitris Koutoulas, who is heading the project in Greece, told the paper.
"Although we are still at the drawing board stage, Gert Hofs plan is to make it the worlds largest light installation, a structure that has never before been seen in any place of the world."
The statue is also expected to cost up to €200m according to yesterdays Vima newspaper.