US ambassador to the UK Matthew Barzun and his team of US diplomats and officials will move out of the building in Grosvenor Square, Mayfair, to a more secure base at Nine Elms in south-west London in 2017.
According to the 'Evening Standard', the prime location building will then be turned into a 137-bedroom five-star hotel with a spa and ballroom for 1,000 guests.
Development plans to be submitted to Westminster Council next month will also include six high-end shops and five restaurants.
Developer Qatari Diar, controlled by the Qatari Investment Authority sovereign wealth fund, has called in British architect Sir David Chipperfield to draw up redevelopment plans estimated to cost around 1 billion pounds.
A public exhibition on the scheme will run from April 11 to 16 at 24 Grosvenor Hill.