Cardinal O’Malley is one of eight cardinals asked to advise the new Pontiff to reform the Catholic Church’s bureaucracy.
He will join cardinals from Chile, India, Australia and the Congo in a new grouping.
The Vatican has confirmed that plans for the advisory group were formulated during pre-conclave meetings.
The group will hold its first meeting at the beginning of October.
The announcement marks the first major decision by Pope Francis, a month after he was elected to office.
The permanent advisory group will counsel the Pontiff on running the Catholic Church and reforming the Vatican bureaucracy.
The Boston Globe described the establishment of the new committee as ‘a bombshell announcement that indicates he intends a shift in how the papacy should function’.
The group features just one current Vatican official; the rest are cardinals from North, Central and South America, Africa, Asia, Europe and Australia.
The paper says the composition of the group is a clear indication that Pope Francis wants to reflect the universal nature of the church as he goes about governing.
A statement from the Vatican said: “Pope Francis got the idea to form the advisory body from the pre-conclave meetings where such complaints were aired.
“He has formed a group of cardinals to advise him in the governing of the universal church and to study a revision of the apostolic constitution Pastor Bonus on the Roman Curia.”
The Globe reports that Vatican spokesman Reverend Federico Lombardi stressed that the cardinals are a consultative body, not a decision-making one, and that they don’t take the place of the Vatican bureaucracy.