Ms Zia was given the house by a grateful nation, her supporters say
Former Bangladesh Prime Minister Khaleda Zia has had the lease on her Dhaka cantonment residence cancelled, the cabinet has announced.
"The house was allocated to her without a decision of the cabinet in 1981. The present cabinet believes that the lease is illegal," a spokesman said.
Current PM Sheikh Hasina was removed from her leased house near parliament when Khaleda Zia came to power in 2001.
Correspondents say Ms Zia's eviction is partly in revenge for that move.
"Under the lease rules, two houses cannot be allotted to one person. Since one house [the cantonment mansion] was given away in 1981 and then another in 1982, [the cabinet] has decided to cancel one," Prime Ministerial Office spokesman Abul Kalam Azad said.
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The 2.72-acre mansion was originally the official home of the army chief, a position held by Ms Zia's husband, Lt Gen Zia, who then converted himself into a civilian head of state through martial law proclamations.
When he was assassinated in May 1981, the house was "inherited" by Ms Zia, whose Bangladesh Nationalist Party was soundly beaten in elections last December.
The decision to terminate her lease follows a statement by Sheikh Hasina in parliament last week in which she said that she wanted Ms Zia to leave the house so that residential apartment blocks could be built on the site for the families of army officers killed in a border guards mutiny in February.
"Why should you, being a political leader, live in the [army] cantonment? You were allotted another in Gulshan [an up-market area of Dhaka]," Sheikh Hasina asked her rival in parliament during an acrimonious debate on 1 April.
"No member of parliament, no leader of the opposition, should live in the cantonment," she said.
However supporters of the opposition have accused the government of being mean and playing "tit-for-tat politics" over the eviction order.
They point out that the murder of Gen Zia was so sudden that he left little or no cash for his widow or for his two sons - Tarique and Arafat Rahman.
Ms Zia's supporters say that the house was given to her after his death to provide a regular source of income following a wave of national sympathy for her plight.
Sheikh Hasina was evicted from her leased house when the BNP won elections in 2001 but has since moved back into it.
The two women have a long history of personal enmity.