He has intimated to civil servants that he will be moving out of his Islington home in North London but he may delay moving for a few weeks to prepare his family for the upheaval.
However, the flat in No10, which used to be the servants' quarters of the house, is relatively small, with four bedrooms, and much less space than the Blairs' current home for him, his wife and three children. It might be possible for Mr Blair to live at No 11, which has a more spacious flat, as Gordon Brown, the shadow chancellor, is unmarried and has no children. The decision by Mr Blair ends speculation that he would follow in the footsteps of Harold Wilson, the last prime minister not to live in Downing Street. During his final term of office, Wilson lived in Lord North Street. While Mr Major has lived at No 10, during the early part of his premiership his wife, Norma, remained at their home in Huntingdon.
If Downing Street is unsuitable, the prime minister could choose from several other government-owned flats including three at Admiralty House and the home generally occupied by the home secretary in South Eaton Place. The prime minister also has the use of Chequers, the country home in Buckinghamshire.
It also emerged yesterday that civil servants do not expect Labour to have a deputy prime minister with extensive powers, like the current incumbent, Michael Heseltine, who has a palatial office at 70 Whitehall which houses the Cabinet Office. This suggests that John Prescott will not be taking a similar role.
Labour refused to be drawn on speculation about either Mr Prescott or Mr Blair. A spokesperson said: "We have no comment to make on this."