IT is a remarkable turnaround. Five years ago the Hindujas were embroiled in a “cash for passports” scandal. This weekend they are busy planning the most luxurious family home in London seated at the centre of power.

The brothers have spent £58m buying the right to live in the former head office of the Crown Estate, the Queen’s £6 billion property portfolio.

They have taken out a 100- year lease on its office in Carlton House Terrace on the Mall, the road that leads to Buckingham Palace from Trafalgar Square, with Downing Street just around the corner.

When not sending out wedding invitations to the likes of George W Bush and Tony Blair, they are budgeting on spending between £40m and £50m over the next three years on renovating the office and turning its 60 rooms into accommodation for 38 members of their extended family.

The deal has been struck by Srichand and Gopichand Hinduja, the eldest of four Indian billionaires. Prakash and Ashok, their brothers, will also use the house as a London base.

The family will live in a communal Hindu fashion, sharing the same kitchen and dining togther before reclining on sumptious divans draped in the richest silks.

The sons of a Bombay moneylender, they inherited a business empire that included oil, banking, telecoms and transportation of goods. They have added to it by going into property development and insurance. This year’s Sunday Times Rich List put their wealth at £3.6 billion.

Once completed, the Hinduja “palace” is likely to outstrip the value of the home of Lakshmi Mittal, the Indian-born steel magnate who is Britain’s richest man. He paid £70m to Bernie Ecclestone, motor racing’s powerbroker, for his house in Kensington Palace Gardens, west London, which has marble features imported from the same quarry that supplied the Taj Mahal.

The Hinduja home will have 62,000 sq ft of living space — 12,000 sq ft more than the Mittal home.

The terrace was commissioned by King George IV in the 1820s on the site of the palace where he had lived as Prince Regent. Its residents have included Earl Grey, whose family gave their name to the tea, and William Gladstone, the Liberal prime minister.

The Crown Estate office was created from four of the original houses. The Hindujas will recruit a team of architects, contractors and designers to transform the grade I-listed building into a mansion.

The most luxurious interior design in London so far has cost £400 per square foot. The Hindujas must spend twice as much because of the need to match the original materials when restoring oak panels, cornices and marble floors.

An Asian interior designer will be hired to give the new home a “traditional Indian feel”. A friend said that the family would incorporate a temple in the house dedicated to Krishna where they could gather to do their puja or religious rituals.

The new property will have up to 32 bedrooms, but just one living room, dining room and kitchen which will be shared by the extended family. Unlike most Indian joint families, however, the Hindujas will also have a swimming pool, a gym and cinema in the basement and a ballroom and terrace where they will be able to entertain their politician and film star friends.

One family member said: “The Indian joint family has pluses and minuses. You have to make a lot of sacrifices and have tolerance and understanding. If it works, it’s heaven. If not, it can be hell.

So far, with God’s blessings, it goes well.”

Sources said that the brothers have long coveted the property and believe that they are finally emerging from the controversy which had led to Peter Mandelson’s second resignation from the cabinet.

An inquiry found that neither the brothers nor Mandelson had acted improperly following claims that when Mandelson was Northern Ireland secretary he had pushed for the brothers to be given British passports in exchange for a £1m donation to the Millennium Dome.

Later next month the brothers will celebrate what they regard as their “turnaround year” with the wedding of Ranuka, daughter of Prakash, to a Swiss lawyer. They have sent out invitations to Bush, Blair and Manmohan Singh, the Indian prime minister, as well as to Goldie Hawn and Richard Gere, the Hollywood stars. Michael Jackson, the singer, and Salman Rushdie, the author, for a week of celebrations in London, Geneva and Mumbai.

The new home, when it is finished, will be the venue for their annual Diwali party, previously held at Alexandra Palace, north London, where politicians and celebrities join them to celebrate the Indian festival of lights.

Adina Kohn, owner of ASK Property Consultants, who has helped to design homes for other Asian multi-millionaires, said: “I expect there will be lots of gold leaf, rich carpeting and luxurious fabrics in bright colours.”

Alex Michelin, a director of Finchatton, a luxury developers’ firm, said: “The cost is excessive even for billionaires but so long as they are sympathetic to the original features there is lots they can do, even in a listed building.”

Ed Mead, a director of Douglas and Gordon, a London estate agency, said: “This is a trophy address. It is a fantastic location, very much at the centre of power.”

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