Other suggested names had included Nile Republic and Cush, a reference to a Biblical-era kingdom in the area.
Some 99 per cent of southern Sudanese voted for independence from the north of Sudan in a referendum held in January.
The name decision was announced after a meeting of the top committee of the south's ruling SPLM party.
The SPLM's Secretary General Pagan Amum said the decision, made by the party's politburo, will require approval by parliament.
But that is a formality as the SPLM holds the vast majority of seats in the assembly.
Mr Amum said negotiations were under way with the north about how to go forward with the partition and he warned of the challenges ahead.
"We are a baby nation that has just been born - and like a human baby, we are fragile but have the potential to become great," AFP news agency quotes him as saying.
He said the current pound currency would be replaced by a new currency, also to be called the pound.
The referendum on independence for the oil-rich south was part of a deal to end decades of north-south conflict.
The week-long vote itself passed off peacefully, but tension remains high in parts of the oil-rich area which straddles the north and south.
Many issues remain to be resolved before the new country is formed, including how to deal with oil revenue. The south of Sudan contains most of the oil fields, but they have to be transported through the north.
Under the Comprehensive Peace Agreement (CPA), which brought the civil war to an end in 2005, the two sides split oil revenues evenly, but Amum announced on Tuesday 15th February that would not be the case any longer.
"The notion of sharing wealth will not be there. There is no continuation, whether 50 percent or anything," Amum said according to Reuters.
He said they will only pay a fee for using the pipelines that transport the oil to Port Sudan.
The fate of the oil-rich Abyei region is yet to be determined, although Amum said the SPLM will hold talks with the north's ruling National Congress Party (NCP) on Friday 18th February to discuss the region.
The Abyei region was supposed to have its own referendum on which State to join in January, but it was postponed when the two sides could not agree on voter eligibility.
Last week, some 200 people were killed in south Sudan's Jonglei state in fighting involving those loyal to rebel leader George Athor. Most of those killed were civilians. The SPLM has accused the north of backing Athor, while Athor blames the clashes on the southern army.
Sources: BBC News, Sudan Tribune
For more news and expert analysis about the Sahara region, please see Sahara Focus.
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