The government will take responsibility for Grenfell Tower when the police release the site as a crime scene.
The housing ministry will take over safety and security until the community decides how the site should be used.
Kensington and Chelsea Council, which owns the site but will not have a management role, welcomed the decision.
Survivors of the 2017 fire, in which 72 people died, had feared the council would take control of the west London site and said they were “relieved”.
Natasha Elcock, a member of survivor and bereaved group Grenfell United, said: “It’s hard to put into words how personal what happens to the site is to all of us who lived in the tower, lost loved ones in the fire and for the wider community.
“The people we lost that night will be forever in our hearts and it will be survivors, bereaved families and the community that will make decisions together about what happens to the site now and how we remember the loved ones we lost.”
The government, which is set to take over management of the site in the autumn, has said access for those involved in the Grenfell Tower Inquiry remains the priority.
Decisions taken by central government will be implemented by the independent team – led by the chief executive of Bromley Council – which has overseen day-to-day management of the site since last July.
The land will be transferred to a body representing the bereaved and survivors once an appropriate body is set up and when the land is ready for use – as set out in an agreement between the government, the local council and community groups.
A spokesman for Kensington and Chelsea Council said it should be for the Grenfell community to decide on the tower’s future.
The Ministry of Housing, Communities and Local Government said Wednesday’s announcement was “the next step on the journey to a fitting memorial”.
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