Opening on 1 April, the new unit will integrate the COI's existing digital media and transformational government teams.
The unit will work to develop new channel strategies, improve the Government's digital standards and build new web 2.0 applications and services. It will also advise policy teams across government, offering strategic and practical advice on transformational change.
COI director of transformational strategy Alex Butler said: 'This new unit will put COI at the heart of some radical changes in government, laying the foundations for broader, more interactive propositions for the departments and agencies we work with.'
The new unit will be led by Nick Jones, who has been appointed as director of interactive services.
Jones was previously at the Cabinet Office's transformational government team, where he specialised in service design and customer insight. He is a co-founder of New Media Age and was a new media senior analyst with Jupiter Research before joining the public sector.
Jones will lead a team of between 20 to 30, and will report to Butler. He said: 'You don't use social media because it's cool, you use it where it's effective. You are integrating it into existing PR elements.'
Meanwhile, COI digital specialist Jamie Galloway is to join digital media consultancy Circus Street.