The DCLG will abandon its Eland House headquarters next year and relocate around 1,200 staff to the Home Office's Westminster base, senior officials have announced.

Co-locating with the Home Office in Marsham Street is forecast to deliver total annual property savings worth £24m to the civil estate and £8m cash savings to the DCLG – ahead of a further squeeze on departmental budgets in June's spending round.

Since 2010 the DCLG has shed more than a third of its workforce and now employs 1,200 staff compared with 2,200 previously – freeing up office space in Eland House.

Recent changes to the Home Office - including reductions in staff headcount, the decision to move the Government Equalities Office to the department for culture media and sport and the recent splitting up of the UK Border Agency – mean the Marsham Street office is under-occupied.

Director-general of finance and corporate services at DCLG, Sue Higgins said: ‘Now that the department workforce is 37% less, we don't need as much space so it makes sense to find more suitable accommodation.'

Helen Kilpatrick, director-general of finance and corporate services at the Home Office said the move is not just bout saving money and puts the department at the forefront of civil service reform in developing flexible ways of working.