The federal government has sold the West Block buildings in the Parliamentary Triangle for $6.25 million, with new owners Geocon planning to turn the historic building into "the most famous hotel in Australia".
The sale marks the first private land ownership inside the parliamentary triangle which includes Parliament House, Old Parliament House, the High Court and the National Gallery of Australia.
Other buildings in the area, including the Anzac Park East, Anzac Park West and East Block buildings, are currently up for sale.
Finance minister Mathias Cormann said the heritage value of the building - which is currently vacant - would be protected.
"Private investment presents an opportunity to revitalise all these properties and ensure the significant heritage values are retained," he said.
Canberra-based developer Geocon said it plans to restore the heritage-protected façade and redevelop the interior to transform the West Block building into a luxury hotel.
Geocon managing director Nick Georgalis moved to dispel concerns over the future of the historic buildings, saying the hotel would preserve and celebrate Canberra's early history.
"One of the best things about the hotel being in a heritage building is that it's open to the public," he said.
"As a boarded up building, it doesn't provide access to people, when important parts of Australia's history happened there.
"You've got to ask, what is the heritage value of something that no one can visit?"
The sale came on the same day the ACT parliament passed an amended Green's motion pledging to work with the Federal Government to explore alternatives to the outright sale of the East and West Blocks, including long-term leasing arrangements.
"[The assembly] acknowledges that the parliamentary precinct between Parliament House and the Lake has special national significance and should only be used for important national functions and cultural institutions," the motion read.
The ACT Greens previously opposed the sale saying it was "deeply concerning" and a blow to national heritage.
But Eric Martin, from the National Trust, said there was a heritage management plan in place for the West Block.
"From a heritage point of view, my view it's a crying shame these buildings are left vacant," he said.
"We're better off having a use for them."
Geocon has a raft of high-profile projects in planning or building in Canberra, including a new luxury hotel in Canberra's CBD at the Garema Centre site, and mixed use precincts in Woden and Belconnen.
The hotel at West Block buildings will be designed by architect Fender Katsalidis with plans to be open before Christmas 2019.
The building was one of the earliest buildings erected in the Parliamentary Triangle and was once home to the National Library, the Crown Solicitor's office amd the Australian Electoral Commission.
Part of the site, known as the dugout, was a World War II bomb shelter, which was used to decode messages between Australian prime minister John Curtin and British prime minister Winston Churchill.
"We believe it will be the most famous hotel in Australia," Mr Georgalis said.
"We are very excited to have the opportunity to create another unique property which both preserves and celebrates important aspects of Canberra's early history, and we take this responsibility very seriously.
"We also want Australians - the original owners of this property - to have maximum opportunity to enjoy its history and significance, as they are able to do with the re-purposed Old Parliament House."
"Given its location and history, this hotel has the potential to be talked about all over the world, to be one of those 'must see' icons when people visit Australia's national capital, like Raffles in Singapore or George V in Paris."