Raj Bhavan , Puri which was called as Government House was established in the year 1913 on the golden sea beach Puri, on an area of 30.226 acres. When Orissa was part of Bihar Province, the former Governors of Bihar-Orissa province were camping at Puri when visiting Orissa . After formation of Orissa as a separate state on 01.04.1936, the Governors of Orissa used to stay at Government   house, Cuttack and in summer times  at Raj Bhavan, Puri, till early 70s.

For development of tourism in Orissa, former Governor Shri B.D.Sharma had suggested to the Govt. of Orissa for conversion of Puri Raj Bhavan to a Posh Hotel for international tourists with facilities for Golf, Swimming Pool, Tennis Court and big hall for holding conferences. India Tourist Development Corporation (ITDC) was therefore, pursued to take up the venture. Finally in the year 1983, an area of 8.926 acre of Raj Bhavan, Puri was handed over to Revenue Department for alienation of the said land to Tourism Department, in which ITDC has established the Neelachal Ashok Hotel.