The British government is to sell Marlay Grange, the Rathfarnham house it acquired as a new ambassadorial residence in 2000 but never used. The 10-bedroom Victorian house on 12 acres at Grange Road, Dublin 16, was purchased by the British Foreign Office for around €9 million.

The purchase of the house followed the sale of its then residence Glencairn and its 34-acre grounds in Sandyford in 1999 for security and operational reasons to Park Developments for €35.6 million. Since then Glencairn has been rented back by the foreign office for its ambassadors.

Marlay Grange, which once formed part of the Marlay House estate, was in need of extensive refurbishment when it was bought. Almost €1 million has been spent on renovations to date. Property sources currently value Marlay Grange and its 12 acres at around €10 million.

Then the British Foreign Office decided it wanted to buy back Glencairn without its grounds - a decision prompted by the improved security climate following the signing of the Belfast Agreement.

The British embassy told The Irish Times yesterday that the "British government has decided not to renovate Marlay Grange and will be putting the property on the market".

Colliers Jackson-Stops, which acts for the embassy, would not comment on the recent announcement. The British Embassy also confirmed that it is in negotiations with the owner of Glencairn to buy back the house and some surrounding gardens.

In 2004 a British House of Commons Foreign Affairs committee ruled that the foreign office's U-turn on Glencairn resulted in the loss of a potential profit of at least €5.86 million.

The committee said "serious mistakes" had been made in the sale and attempts to buy back Glencairn resulting in the loss of millions of pounds to the British taxpayer.