New headquarters are to be built for the Home Office and the prison service, it was announced on Tuesday.

The offices, which will cost £311 million at current prices over the next 29 years, will be designed by architect Sir Terry Farrell and will be on the site of the former Department for the Environment.

The three tower blocks on Westminster's Marsham Street will be demolished "as soon as possible", a spokesman said.

As revealed in a written parliamentary answer to Labour MP for Chorley, Lindsay Hoyle, the lease for the Queen Anne's Gate offices will be transferred to the Lord Chancellor's department.

Built under a private-public partnership arrangement with Anne's Gate Property Plc, the new building will contain shops, a creche and housing. Completion is not expected until Spring 2005.

John Gieve, permanent secretary at the Home Office, said that the change would "help us do our business better."

"In partnership with the private sector, the project to create new offices at Marsham Street will give much better value for money than any of the alternatives open to us, especially as a new government occupier plans to refurbish and re-occupy the existing main Home Office building at 50 Queen Anne's Gate.

"With the early demolition of the present Marsham Street tower blocks, the project will also remove a blot on the London landscape," he said.