The Ministry of Housing, Communities and Local Government will have a new home in Wolverhampton, with 500 posts including senior civil servants moving to the West Midlands by 2025.
It will be the first ever ministerial office outside of Westminster and is part of the Places for Growth programme, which aims to shift away from the London-centric approach to government.
The department will keep its London office, but have dual headquarters there and in Wolverhampton in a move which Communities Secretary Robert Jenrick said would see a "regular ministerial presence" in the city.
A base for the department is expected to be announced in the coming weeks, with the new i9 development near the railway station put forward as a potential site.
Mr Jenrick said the move was a "historic step" that would "spread opportunity and prosperity" across the region.
He said: "With a dual headquarters in Wolverhampton my department will not only change where we work but how we work, signalling the end of the 'Whitehall knows best' approach.
"All of us at the department are looking forward to having the opportunity to work there.
"This Government knows that by having more local voices at the heart of our policy development and delivery, we will support our communities more effectively, and we will continue to develop greater career options in Government outside of London.
"In choosing Wolverhampton we are also backing our great smaller cities, some of which have been neglected for too long. We want to raise their stature, encourage civic pride and commercial success."
Wolverhampton South West MP Stuart Anderson, who alongside Mayor Andy Street has lobbied Ministers to open a department in the city, said: "This move will bring hundreds of jobs to our city at a time when we have ambitious plans to level up our whole community.”
Under the plans, the housing and communities department will have at least 800 roles outside London by 2030, including 50 per cent of the most senior positions.
Forty roles have relocated to the region in the past year.
'Landmark day' for city hailed
It was a plan that was first discussed at a meeting outside Wolverhampton railway station on a chilly January morning.
Communities Robert Jenrick floated the idea of moving part of his government department out of London, and Stuart Anderson – the then newly-elected MP for Wolverhampton South West – thought he knew precisely the right location.
Why not open up a headquarters in Wolverhampton, he asked, before reeling off a lengthy list of the city's many qualities.
It was possibly wasted on Mr Jenrick, who knows the city's charms very well having attended school at Wolverhampton Grammar and grown up in nearby Shifnal and Ludlow.
The trail went cold during the early stages of the pandemic, but picked up pace towards the end of last year once Boris Johnson started to get serious about the Places for Growth programme.
The strategy – initiated by a previous administration – to move more civil service roles to the regions became a central feature in the Government's levelling up agenda, which like everything else had been held back by the Covid crisis.
Hopes were raised in October, when Mr Johnson pledged to move "departments of state – ministers, private offices and all" to "regions that represent the future of this country".
By this stage West Midlands Mayor Andy Street and Wolverhampton Council were on board, and discussions with Ministers over the proposals started to take place on a regular basis.
In a meeting last month, Chancellor Rishi Sunak asked MPs from the region to outline the "biggest drivers" to levelling up their areas.
Mr Anderson told him that promises alone were not enough, and that "actions speak louder than words". Opening a department in Wolverhampton would prove that the Government really does mean business, he pointed out.
Now the move is in motion.
The move will see ministers become a regular presence in the city, while also boosting the local economy and helping the development of a greater range of career options across the region.
Mr Street hailed a "landmark day" for Wolverhampton, saying that a huge cross-party effort had "won the argument to bring a major department here".
“Not only will the relocation of bring hundreds of jobs and millions of pounds of investment to the city of Wolverhampton and the wider West Midlands, but it is also a major vote of confidence in our region and shows how far we have come in recent years," he added.
“One of the keys to levelling up is bringing decision making closer to those communities it affects, and so I look forward to welcoming Robert Jenrick and his team to the region.”
Councillor Ian Brookfield, the leader of Wolverhampton Council, said: "Credit where credit's due, this announcement comes after a lot of hard work by the city council, Stuart Anderson and Andy Street.
"Between the three of us we have worked really hard after the initial interest from the Secretary of State in placing something in Wolverhampton.
"We are over the moon that part of the national government will be coming to Wolverhampton. It will bring people's jobs and resources to our city and they are more than welcome.
"We've always said, why would you want to live in London when you could work, live and play and bring up your family in our beautiful city at probably a quarter of the cost of what they pay down south?
"We welcome this announcement with open arms."
Shadow City Minister Pat McFadden, the MP for Wolverhampton South East, welcomed the move but said he was still greatly concerned about unemployment in the city.
“After a 70 per cent rise in the city’s unemployment levels over the past year this is welcome news," he said.
"We went into the pandemic with unemployment levels twice the national average and thousands more have lost their jobs since then so new jobs are sorely needed.
"Wolverhampton is a great place and we are well placed to attract new investment.
"The city worked hard to bring this to a successful conclusion and I hope the Secretary of State can commit to a good proportion of these jobs going to local residents.
"Hopefully we can attract more investment in the future."
The location for the department is expected to be confirmed in the next few months, with the city's new i9 building on Railway Drive believed to be under consideration.
The MHCLG move to Wolverhampton is part of a wider plan to shift government departments away from the nation's capital that will also see Department for Transport jobs move to Birmingham.