The headquarters of the Office for National Statistics (ONS) is to close with the loss of up to 600 jobs, unions have said.
Officials said staff were told that plans were being drawn up to close the London office by 2010 and staff relocated to Newport in South Wales or made redundant.
The Public and Commercial Services union said staff were "livid" at the news, which they warned would increase the threat of a national civil service strike.
Tens of thousands of civil servants are already being balloted for industrial action in a dispute over jobs and pay.
The union said it feared there could be up to 200 compulsory redundancies and pledged to fight the plan.
Officials claimed that £75 million had been spent on modernising the ONS but warned of computer problems and gaps in funding.
"The organisation is in freefall," said one official. "They plan to have just a token presence in London but we have major concerns about the effect on the credibility of the organisation."
Mark Serwotka, general secretary of the PCS, said: "These plans are unnecessary, ill thought out, and will undermine the quality of the statistics that the Government base new initiatives and policies on.
"With compulsory redundancies likely on a far larger scale than ever before, (this) announcement will anger staff, stiffen their resolve and increase the likelihood of a civil service wide strike.
"If the Government are to avoid a conflict with its own workforce then it needs to move swiftly in giving assurances over jobs and services."
