Bates Smart will design the new Australian Embassy in Washington DC with the existing dilapidated structure to be replaced by a new contemporary building.

Foreign Minister Julie Bishop, who made the announcement, said that a new $237-million environmentally sensitive building will come up on the same site in the city's diplomatic precinct. The new Australian Embassy will be designed by Bates Smart, which had earlier designed the original building in collaboration with McCutcheon.

Bates Smart was also engaged to design the new Australian Embassy in Berlin. The architectural practice has additionally been involved in major domestic projects such as the new Royal Children's Hospital in Melbourne and Sydney University's Faculty of Arts and Social Sciences building.

The existing building on Massachusetts Avenue at Scott Circle was opened in 1969. The deteriorating condition of the structure led to the decision to build a new embassy, given that the cost of renovations to improve amenity and occupational health and safety would have been equivalent to the cost of a new building.

Key design highlights of the new building include an expansive central glass atrium, a large open public space looking towards the White House, an exhibition gallery and a function area. Several features have been included in the design to achieve the highest global environmental design standards.

The 2015-16 federal budget has made an allocation of $236.9 million for the project over a seven-year period. Work is expected to begin in October 2019, and the new embassy is scheduled for handover in November 2021.