Dandara will get a 99-year lease of the land where Cyril Le Marquand House currently sits, ITV News understands.
It has been revealed that the development company plans to build the government's new headquarters at the site at a cost of £90 million. Dandara will then lease the building to the government for the first three years, with the executive having the option of purchasing it afterwards.
Under the plans the rent cannot go up more than 5% every three years.
The announcement follows comments from Jersey's Chief Minister last November that he expected housing to be a "perfect use for Cyril Le Marquand House."
The news that those plans have now changed, has caused a stir amongst politicians, including the head of Jersey's Corporate Services Scrutiny panel.
There has been no public discourse about this. Maybe the public won't find the location of the government office a particularly burning issue, but they do find housing a burning issue and they do care about how government uses their money and their assets. It's all about asking: 'Is the government making the right decision for the people of Jersey and for the long term future of Jersey?
However, the Government of Jersey is yet to comment on the move, saying it is still working on a deal.