A spokesman confirmed that he would be honouring his pledge to give all profits from the sale of the semi-detached property in leafy Bents Green back to the taxpayer.
Mr Clegg, MP for Sheffield Hallam, bought the house in 2005 when it was in what he describes as a "complete state of disrepair".
He revealed shortly before the General Election that he planned to sell the house, after it was revealed that the taxpayer had footed a 83,824 bill between 2005 and 2009 for redecoration, furnishings and work on the garden.
Although the Lib Dem leader was later ordered to repay 910 for gardening costs the rest of his claims for the home were deemed to be within the rules.
His expenses claims included monthly interest repayments of 1,018 on the 279,000 mortgage, 9,244 in legal costs and stamp duty, 2,600 for a new kitchen and decorating costing 5,858.
Defending his claims, Mr Clegg said in April: "I think, unlike almost everybody else, I have said very clearly and very openly that my approach to this is that's not my home, it's a home on loan to me from the taxpayer and that when it's sold every single penny of value gained is returned to the taxpayer."
A spokesman confirmed Mr Clegg was planning to sell his Sheffield home and look for a property to rent in line with the new expenses rules.
Angry protesters also confronted the Deputy Prime Minister yesterday afternoon as he arrived at Sheffield Town Hall to speak at the launch of "Opportunity Sheffield", a new service which aims to provide advice to businesses in the city.
The demonstration had been organised by trade unionists objecting to the "attacks being made on jobs, education, the NHS and other essential social services" by the government.
Many were also aggrieved by what they see as a betrayal by Mr Clegg, whose leaflets prior to the General Election advised people to vote Liberal Democrat to "keep the Tories out" – and then entering into a coalition with the Conservatives.
n Former Cabinet Minister David Blunkett is considering asking an equality watchdog to investigate whether the Government is neglecting its legal duty to help the poorest.
The Sheffield MP released figures which he said showed the devastating impact which cuts will have on the poor. The Equality and Human Rights Commission may be asked to rule whether the Government is neglecting its legal duty to safeguard the most vulnerable.