It might seem strange that the idea of the penalty kick was first put forward by a goalkeeper-
William McCrum, of Ireland's Milford FC proposed the idea in response to the widespread practice of deliberate fouls preventing clear goal scoring chances. Under the rules as they stood such fouls were punished by indirect free kicks, which were relatively easy to defend.
In June 1890 the idea was submitted to the International Football Association Board .
Here is the proposal:
If any player shall intentionally trip or hold an opposing player, or deliberately handle the ball within twelve yards from his own goal line, the referee shall, on appeal, award the opposing side a penalty kick, to be taken from any point 12 yards from the goal line, under the following conditions: All players, with the exception of the player taking the penalty kick and the goalkeeper, shall stand behind the ball and at least six yards from it; the ball shall be in play when the kick is taken. A goal may be scored from a penalty kick.
Which was amended to:
The proposal was initially unpopular, but a high profile incident in a Stoke v Notts County FA Cup quarter final on 14th February 1891 seems to have swayed opinion- a deliberate handball on the goal line lead to an indirect free kick which did not produce a goal- justice did not prevail.
The rule came into effect in 1891.
The first goal from a penalty kick was scored by Alex McCall for Renton FC against Leith Athletic on August 22nd 1891.
In England it is generally held that "Billy"Heath, playing for Wolverhampton Wanderers against Accrington at Molineux on 14th September 1891 scored the first penalty. However, on the same day Bailey of Leicester Fosse scored one against Notts County, and the times are unrecorded.
One myth that is perpetuated on many websites is that Newton Heath's Alf Farman scored the first penalty in England. This seems to originate from Clark Miller's 1998 book He always puts it to the right , which states that Farman achieved the feat in a game for for Newton Heath v Blackpool in the Lancashire League on September 5th. However, at the time Newton Heath were in the Football Alliance, and their first recorded fixture that season was on September 12th. However, a crowd of 4000 at North Road would have seen Farman score a penalty against Blackpool in the fourth qualifying round of the FA Cup on December 5th 1891.