"Ian Botham was the inspiration for an entire generation of young cricketers growing up in the 1980s and I am proud to count myself among them," said Vaughan.
"But Ian's achievements go far beyond cricket. With the help of his family and friends, he has devoted an enormous amount of time and energy to helping those less fortunate than himself.
"His knighthood is richly deserved and I know that he will take great pride in it."
Botham helped England famously win the Ashes in 1981, almost single-handedly inspiring them to victory at Headingly, but this pales into insignificance when compared to his 14 first-team appearances for United.
He trained with the Iron, and played for the reserve side, during the winter months to maintain his fitness levels.
And he made more than a dozen appearances for the first-team over five years, making his debut in the 3-3 draw at Bournemouth in 1980.
During his time at the Old Showground Botham's contacts and prestige brought a number of fundraising events - including a 5-5 friendly draw with Ron Atkinson's Manchester United in 1985.
But Scunthorpe was not always a happy hunting ground for Botham - he was involved in an infamous brawl on a Christmas night out with his team-mates.
Criminal charges brought against him were later dropped, but they were fears he would miss the 1980-81 tour to the West Indies as the result of a potential trial.