Commodore Bainimarama announced the change in his annual New Year's address to the nation.
However, he made no mention of the Union Jack and whether or not it's likely to be replaced on the flag.
The current flag features the red, white and blue Union Flag of Britain in the top left-hand corner with the shield from the Fiji coat of arms on the right side.
Fiji United Peoples Party leader Mick Beddoes says most people in Fiji wouldn't support a change to the flag.
"No, definitely not," he told Radio Australia's Pacific Beat.
This is similar to the decision that the interim administration has made in regards to the currency,"
In November, Fiji's Reserve Bank dumped Queen Elizabeth II from its currency, announcing a new look fauna and flora design.
"They are making decisions that really, are the decisions that an elected parliament or an elected executive with the proper mandate, legal and legitimate mandate of the people, should be making." said Mr Beddoes.
Ready by March
In his New Year's address, the prime minister also announced the country's new constitution will be ready within three months.
He says this will pave the way for a return to an elected government next year.
Commodore Bainimarama tore up the previous constitution in 2009, three years after seizing power in a military coup.
He says the new, modern and enduring constitution will be ready by the end of the first quarter of 2013, and this will set the scene for the national elections in 2014.
A draft of what will be Fiji's fourth charter is currently with President Epeli Nailatikau before being reviewed by a special assembly.
The former British colony recently removed the image of Britain's Queen Elizabeth II from its currency and Commodore Bainimarama said it would soon get a new flag.
"All of this is to reflect a sense of national renewal, to reinforce a new Fijian identity and a new confidence in being Fijian on the global stage," he said.