St Joseph Home in Ghajnsielem is to be rented out by the Gozo Church to the government for use as an old people's home.
The agreement was signed today in the presence of Bishop Mario Grech and Gozo Minister Anton Refalo.
The government said the home is to be rented at a lower rate than the market value.
It will be converted into a home for the elderly and administered by the ministry, while the Gozo church will provide religious services including two masses every day.
The Home will have 70 rooms and 140 beds with views of Fort Chambray, Xatt l-Aħmar, Comino and the countryside. The Home may also be used for foreign elderly persons and preliminary talks to this end have been started.