Staff from the Department of Social Services are expected to work in just two buildings in Woden and Tuggeranong within four years, following $26.8 million in funding from Tuesday's federal budget.
About 2200 department officials will be based in newly built accommodation after the current lease at the Tuggeranong Office Park expires in December 2016.
Ending speculation about a possible departure from the area, the budget allocation comes as the department looks to make savings of as much as $7 million per year from the consolidation.
The funding over three years is for relocation and fit-out of a privately owned building and represented the only significant new funding for the territory from Tuesday's budget.
"This provides certainty for staff about their long-term work arrangements, as well as for Tuggeranong businesses and the local economy," a department spokeswoman said on Wednesday.
Staff currently accommodated in Tuggeranong Office Park, Guilfoyle House, and Holwell Street are expected to work from the two offices after upgrades to existing facilities were deemed too costly.
Disability access and other environmental conditions were considered as part of the decision to relocate.
Negotiations with possible tenderers for the new site are believed to be under way and consultation of staff is planned for coming months through a special internal website and printed displays.
ACT Senator Zed Seselja said the decision could see private sector investment of as much as $150 million in the region.
He said the new office accommodation would include environmentally sustainable infrastructure and promote productivity and workplace health and safety.
Senator Seselja conceded there had been "mixed feedback" to the federal government's first budget.
"There are obviously a lot of concerns, as you would expect where there's a tough budget," he said.
"It is not just a tough budget for Canberra but also a tough budget for the nation because we've been living beyond our means. The feedback I've been getting is a mix of 'good on you, we need to fix the budget', to concern about individual measures and I understand that."
He said "unreasonable voices of doom" were exaggerating the potential damage to the ACT economy from the budget and said Chief Minister Katy Gallagher had shown a lack of regard for Tuggeranong.
Ms Gallagher welcomed the decision but said it did not represent significant new federal investment in the ACT, as the department needed to either renew its existing lease or find new accommodation.
ACT and Region Chamber of Commerce chief executive Andrew Blyth said the budget impact would be felt by many Canberra businesses.
He called on the ACT government to provide further economic stimulus measures for business to “weather the storm”.
“There is no doubt the federal budget will hit our community hard and its impacts will be felt widely,” he said.
“However, with the right mix of economic stimulus measures and strong resilience on the part of business owners we can get through this tough time together and build an even stronger and more prosperous economy than today.”