The authority has been considering options for future sites since it announced it would not be proceeding with plans for the redevelopment of Shirehall – which would have cost around £24 million.
The council has now confirmed its intention to relocate to the Pride Hill Shopping Centre, in Shrewsbury's town centre by March 31, 2023 – at a cost of £12.5 million.
It says the project will be paid for by the sale of Shirehall and a £5m grant from the Marches Local Enterprise Partnership.
The site will also be home to other "partners" who will take up office space, while the top floor of the centre will become a leisure venue.
The new civic base would have space for 437 desks, and would have around a fifth of the floor space of Shirehall.
The proposal also says that the council wants to make the Darwin Centre the town's "main shopping centre".
The impact of the pandemic has played a big part in the decision with the council statement highlighting the reduced number of people working at Shirehall.
Steve Charmley, Shropshire Council’s cabinet member for assets, economic growth and regeneration, said the project would provide a boost to the town centre.
He said: "This is a very important milestone for the council and the future of Shrewsbury town centre. It shows how we can create a new civic centre in a way that would be entirely self-funding.
“More importantly this can provide a huge boost for the regeneration of Shrewsbury town centre, bring a major employer right into the heart of the town centre and create the right conditions to help the town thrive as a place that’s great to be in – whether for shopping, leisure, business or as a resident.
“A new civic centre included in the wider development plans for the town centre will be used by the council and partners who seek similar benefits in terms of location, cost, carbon efficiency and more modern working environments. This in turn generates additional footfall and business for Shrewsbury town centre, helping to boost the economy of Shrewsbury and Shropshire.
“As we recover from the pandemic this will be more vital than ever.”
The plans come after the council has faced criticism over its 2018 purchase of Shrewsbury's shopping centres for £51m. In March last year it was revealed their value has plummeted to £17.5 million – a figure calculated before the impact of the pandemic was realised.
The council said it had considered five sites in Shrewsbury as a replacement for Shirehall – The Guildhall, Riverside Shopping Centre, Pride Hill Shopping Centre, and two private buildings – but had decided Pride Hill offered the best value for money.
A statement from the authority said: "An independent review of possible town centre sites was carried out to see which best meets the council’s requirements, including cutting carbon emissions, allowing the council to spend less on buildings and invest more in its staff, and completing a move by March 31, 2023.
"Among the sites considered, three are owned by Shropshire Council – Guildhall; Pride Hill Shopping Centre, and Riverside Shopping Centre – and two are privately-owned buildings.
"The review looked at criteria including suitability, build cost, site preparation, adaptability, maintenance requirements and cost, sustainability and climate impact.
"The Pride Hill Centre was considered most suitable in size, commercial opportunity and support for the town centre’s wider regeneration.
"Developing a civic centre at the Pride Hill Centre would cost an estimated £12.5 million, £11.5 million less than staying at Shirehall. The redevelopment work would be funded by the sale of the Shirehall site, and a £5m grant from the Marches Local Enterprise Partnership would help support the repurposing of the building.
"The council would also have an income earning asset, through rents from five public sector partners who would also use this new civic centre and other tenants."
The options appraisal will be considered by the council’s performance management scrutiny committee meeting on Wednesday, January 20.
A report will then go to the full council on February 25.
The report to council will also consider the proposals for the sale and disposal of Shirehall and its site.
The authority said the adjacent Unison club, sports field or bowling green are deemed to be important community assets and local space and would not be affected by the sale.