Union Tourism and Culture Minister Mahesh Sharma, who was alloted the Rajaji Marg bungalow, has vacated it and work has started to make it available to the president, an official said.
The bungalow was occupied by former President APJ Abdul Kalam till his death in 2015, after which it was allotted to the minister.
Mr Sharma has been allotted a new bungalow at 10, Akbar Road which was earlier occupied by former Defence Minister Manohar Parrikar, another official said.
Mr Parrikar has shifted to Goa as chief minister of the state.
Mr Sharma had earlier said the Urban Development Ministry had asked him if he had any objection to vacating the house.
He had in his reply said the place was more important to the president than him.
A retired president is entitled to rent-free accommodation anywhere in India with free water and electricity for the remainder of his or her life as per the President's Pension Rules, 1962.
The 10, Rajaji Marg house is spread over an area of 11,776 sq feet with the ground floor housing a library and an attached reading space.