The Clintons will use New York as their base

The Clintons already own a home in New York, which is to be their main residence when Mr Clinton leaves office on 20 January.

But his wife had been looking for a Washington base for when she takes up her New York senate seat.

"She needs an address, and I'd like to have some place to come see her," Mr Clinton told reporters on Thursday, before the announcement was made.

When asked if he could afford it, Mr Clinton said: "Well, I hope so. You know, I'm going to go out and go to work."

Mr Clinton is expected to commute from the New York home to office space in Manhattan once he leaves the White House.

Upmarket home

The Washington house is on a one-third-acre plot at the end of a secluded cul-de-sac, close to the vice president's official residence on the grounds of the Naval Observatory, and a 10-minute car ride to Capitol Hill.

$2.85m home

Five bedrooms Seven bathrooms Swimming pool Built 1951

The 5,500-square foot home has seven full bathrooms, a fireplace, a swimming pool and garage, according to an estate agent listing. It includes a study and an office and was built in 1951.

The Brazilian, Danish and Italian embassies are nearby.

The Clintons have looked at houses in several of Washington's upscale neighbourhoods. They came close during the Christmas weekend to a deal on one property, but could not agree with the owner on a price.

Clintons' earnings

Bill: $157,000 annual pension as ex-president Hillary: $145,000 salary Bill: high earning potential as a lecturer, writer and corporate director Hillary: $8m advance on book

In a statement on Friday, the Clintons thanked "the homeowners and brokers who were so kind during our search".

Last year, the couple bought a five-bedroom home in Chappaqua, New York, for $1.7m, allowing the first lady to set up residency in the state and launch a successful bid to succeed the retiring Senator, Daniel Patrick Moynihan.

The white Dutch Colonial house has two fireplaces, a swimming pool and an exercise room. Property tax bills on that home, which has just over an acre of land, are about $26,000 a year.

Legal bills

The Clintons have lived in public housing for 20 of the past 22 years - 12 years when Mr Clinton was governor of Arkansas and the past eight as president.

The couple owe huge legal fees resulting from the Lewinsky scandal

Mr Clinton will get a $157,000 annual pension as an ex-president but his earning potential as a lecturer, writer and corporate director is far greater. Mrs Clinton will earn $145,000 a year as a senator after she is sworn in on 3 January.

The couple owe millions of dollars in legal fees, mostly as a result of the Whitewater and Monica Lewinsky investigations.

Two weeks ago, the first lady agreed to accept an $8m advance from Simon & Schuster for her memoir - among the highest ever for a non-fiction book.