Austria’s interior minister said the move comes after years of debate on what to do with the property.
The Austrian government carried out a compulsory purchase of the house in Braunau am Inn – a town near to the border with Germany – for 810,000 euros (£694,000).
The Nazi leader spent the first few weeks of his life in a flat in the 17th Century building.
Architects from across the European Union will be invited to submit plans for a redesign of the building and it will house the local police force’s offices, Interior Minister Wolfgang Peschorn said in a statement.
“The house’s future use by the police should send an unmistakable signal that this building will never again evoke the memory of National Socialism,” he added.
A jury of experts and public officials will pick the winning architect’s design early next year.
Hitler was born in Braunau in 1889 and Austria argued for decades that it was the first victim of National Socialism, having been annexed by Hitler’s Germany in 1938.
Recent governments have recognised that Austrians were also perpetrators of Nazi crimes and that there was little resistance to Hitler’s rule.
When he was three-years-old, Hitler’s family decided to leave Braunau and Hitler grew up in the Austrian city of Linz.
He moved to Germany in 1913 and served in the German army in World War One.
Hitler’s personal secretary Martin Bormann later purchased the house where Hitler was born for the Nazi Party, and it became a cult centre containing an art gallery and a public library.
At the end of World War Two it was occupied by US troops and the building temporarily housed a documentary exhibition on Nazi concentration camps.
It was restored to its original owners in 1952 before the Austrian Ministry decided to open a “House of Responsibility” within the house – a museum dedicated to Hitler’s crimes.