Reed will step into the role left vacant by the departure of Julian Payne for Burberry in April.
The DWP, whose director of comms Richard Caseby was involved in a spat with The Guardian this week, is expected to advertise the head of news role shortly.
Caseby's predecessor Shield left the DWP in November after being recruited as director of comms for the corporation under director of strategy and digital James Purnell.
Shield described Reed as "intelligent, calm and authoritative" and said he was "used to dealing with a very fast media environment with complex issues".
"The BBC is often a hotly debated topic and we need someone who can operate in that environment under high levels of public scrutiny," he added.
Reed’s move follows two years at the DWP, including time working as press secretary to Chris Grayling. He joined the department after working as a political reporter for a number of regional titles.
One BBC insider added the move was a part of a broader effort to "sharpen up" the BBC’s corporate comms operation, with Reed acting as Shield’s "deputy".
Reed said: "I'm delighted to be joining the BBC at a really important time. It's an exciting challenge and I'm looking forward to working with an excellent team."