Peter Housden, permanent secretary at the DCLG since October 2005, will succeed Sir John Elvidge, who is retiring in June.
Irene Lucas, formerly director-general at the DCLG, will take on Housden’s position on a temporary basis while a permanent successor is sought.
A former chief executive of South Tyneside Metropolitan Borough Council with more than 30 years experience in local government, Lucas joined the DCLG in June 2009.
Housden, who joined the civil service in 2001 after seven years as chief executive of Nottinghamshire County Council, said: "To be leaving [the DCLG] in these circumstances is a huge honour, but also a great wrench."