The development plan would see the embassy move from its existing location in O'Malley to a vacant lot on Turrana Street.

Plans have also been lodged with the Department of Environment earlier this month by the Indian High Commission to also extend its embassy.

The extension would see the Indian embassy's site on Moonah Place border on the future Bangladeshi embassy.

It is estimated construction on both embassy developments will begin in the next 12 months and 4000 square metres of native habitat would be removed from the site.

The new development will have the Bangladeshi embassy neighbouring the Swedish, Turkish and United States embassies, with the proposal stating the current land supply for diplomatic sites in Canberra is "close to exhausted".

While the specifics of the development plan have not been unveiled, the proposal lists construction of the embassy would involve roads and other services within the block of land, as well as security fences around the perimeter.

Despite the development, no public consultation was carried out, with diplomatic missions being exempt from the consultation process.

Approval is first needed by the National Capital Authority (NCA) in order for the development on both embassies to begin.

The NCA had previously signed a crown lease for the land in Yarralumla in January 2015, with official signs for the high commission put up in the vacant block in April.

Officials from the Bangladesh High Commission have been working on the designs and plans for the new embassy since then, with the proposal lodged with the Department of Environment on November 4 this year.

The moves from the Bangladesh High Commission to set up a new embassy in Yarralumla comes as the NCA last year forced diplomatic missions to use prime land near Parliament House that had been sitting vacant for years.

Bangladesh, along with Iran and Russia, moved to use land worth millions of dollars after the NCA used "use it or lose it" laws to force countries to set up embassies after years of inaction.

NCA chief executive Malcolm Snow said in November last year the position was to force movement from "missions that had sat on the fence too long".

Other countries that have wanted to set up embassies in Canberra have been forced to set up in O'Malley.