"The Prince will take the position of SO3 (Defence Engagement). His responsibilities will include helping to co-ordinate significant projects and commemorative events involving the Army in London," a Kensington Palace statement said.
"Prince Harry spent three and a half years in training and operational service with the Apache Force during his attachment to the Army Air Corps," it said.
Harry will be based in Horse Guards in Central London. The 29-year-old is not receiving a promotion and will remain as Captain Harry Wales in his new post, the Mirror reported.
This comes only four months after his brother Prince William, 31, announced he was quitting the military for good to become a full-time royal.
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At present Harry is based in Wattisham, Suffolk, with his unit 662 Squadron 3 Regiment Army Air Corps. He has completed two tours of Afghanistan and last summer qualified as an Apache aircraft commander.
He was prevented from serving alongside his comrades in Iraq in 2007, however just weeks later the Head of the British Army General Sir Richard Dannatt decided serious threats against the prince were too much of a risk.
Harry finally convinced military chiefs to change their minds a few months later and he was deployed to Afghanistan as a forward air controller.
Harry joined the Army in 2005, training at the Royal Military Academy Sandhurst.