The Museum of London has officially started its search for an architect to design its proposed new home inside a vacant Victorian market.

Design competition organiser Malcolm Reading Consultants has been appointed to lead the search. A two-stage contest will begin in February 2016. A panel will be selected to create a shortlist and the winning architect will be announced by the end of Q2 2016.

The museum and the City of London Corporation – which has bought the leasehold for the new site in central London’s West Smithfield locality – are aiming to receive planning permission, raise the necessary capital funds and deliver the new museum by 2021.

The new facility will be located within a 25,000sq m (269,000sq ft) market complex comprising several 19th Century buildings, including a general market and a fish market.

“It’s a challenging site with a strong identity and a robust setting,” said competition organiser Malcolm Reading. "The museum’s ambition to create a dynamic cultural destination here is inspirational. This is a project which will intrigue the global design community."

Sharon Ament, director of the Museum of London, pledged to identify “a world-class, outstanding and inspiring architect who will deliver a design which combines stunning modern vision for a new museum with West Smithfield’s sensitive heritage”.

A £200,000 (US$287,500, €263,200) grant from the Mayor of London’s office has been provided to fund the competition. London mayor Boris Johnson said this would enable the museum “to conduct a global search and ultimately create a major cultural destination and a new landmark for the capital," which will continue to tell the story of London and its residents.

The museum first announced plans to relocate in March 2015, with management citing a number of problems at its current site including poor accessibility, an ageing building and a poor location.

Although two other options – improvements to the Powell & Moya-designed building and developing a new building on the existing site – were considered, the Smithfield relocation was deemed most viable by museum bosses.

Museum of London gets go-ahead for Smithfield move

Scotland Yard's collection of London crime artefacts to get permanent public home

Museum of London's Crime Museum uncovers city's grisly past

Museum of London announces architectural competition to design its new home

Scotland Yard's 'Black Museum' to go on public display for the first time

Heatherwick's Olympic Cauldron to rise again at Museum of London