Sheffield council leader Julie Dore said the city could not wait to welcome back the heptathlon winner on Saturday.
Suggestions about the best way to pay tribute to Ennis's victory include renaming one of the city's squares, to erecting statues in her honour.
Ms Dore said it was important not to rush a decision.
A civic reception will be held and Ms Dore said she would recommend to councillors that Ennis be given the freedom of the city, the highest honour the council can bestow.
"I know people are wanting a long-lasting legacy for Jessica," she said.
"There's been all sorts of suggestions mentioned, from renaming squares to renaming roads to renaming buildings, all sorts of different things.
"We need to sit down with Jessica, her team, her parents and work out between us what's the most appropriate and fitting legacy for Jessica."
Ms Dore spoke as a banner celebrating Ennis's achievement was put up on the front of the town hall.
She added: "I think it's a fantastic, incredible, phenomenal achievement.
"A young woman, born and bred in Sheffield. She's worked so hard and she's so dedicated and committed to her sport.
"She deserves everything she's got. She's one of ours.
"We're so proud of her in Sheffield. We can't wait for her to come home and bring that gold medal with her."
People were queuing on Monday to take photographs of the postbox outside the town hall which the Royal Mail painted gold in the athlete's honour.
Meanwhile, former council leader Paul Scriven, is leading a campaign to rename the city centre's Tudor Square in Ennis's honour.
Deputy Prime Minister Nick Clegg, MP for Sheffield Hallam, has also called for the athlete to be granted the freedom of the city.
Jessica Ennis's home city is to consult with her before deciding the best way to permanently mark her Olympic gold medal-winning efforts.