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Villa Grandi, Canada's official residence in Rome, is off the market and is going back into diplomatic service.

The Liberal government has taken Canada's historic official residence in Rome, Villa Grandi, off the auction block, reversing the previous government's policy of unloading valuable and often dazzling foreign properties that it argued were too costly to maintain.

Joe Pickerill, spokesman for Foreign Affairs Minister Stéphane Dion, said Villa Grandi is going back into diplomatic service. "I can confirm the property is off the market and, for operational reasons, we're keeping it that way for the foreseeable future," he said in an e-mail on Thursday.

A government source in Ottawa said the sale of other high-end residential properties that the Conservative government was bent on selling is under review and may be stopped. But many of the top overseas properties had found buyers before the Liberals took office last autumn and are gone forever.

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In pictures: Canadian diplomatic residences put on the market by the Conservatives

The decision in 2013 by John Baird, Mr. Dion's predecessor, to sell the showpiece Villa Grandi triggered a diplomatic storm and a debate over whether the property, in the heart of ancient Rome near the Appian Way, the Roman empire's most important strategic road, was or was not part of Italian war reparations to Canada.

It is understood that the Conservatives had put a floor price of about €12-million ($17.1-million) on the property, whose gardens cover two acres and whose four-storey main villa, built in 1934, covers 11,000-square feet. At some point, a Venezuelan diplomat offered to buy the property for himself but the offer was rejected as too low. The Canadian embassy in Rome declined to comment.

The campaign to reverse the sale was led by Robert Fowler, the outspoken former diplomat who lived in Villa Grandi between 2000 and 2006. Appealing for help from Canada's war veterans, Mr. Fowler called Villa Grandi "a monument to the sacrifice of Canadians who fought in Italy during the Second World War."

Canada lost about 6,000 soldiers in the Allies' Italian campaign, with another 20,000 injured, and the country is strewn with Canadian military gravesites.

When he was ambassador to Italy, Mr. Fowler established an "Ortona Library" in the villa in memory of the Battle of Ortona, the 1943 clash on the Adriatic Sea where almost 1,400 Canadian soldiers were killed by German paratroopers. Jeremy Kinsman, another Canadian ambassador who lived in Villa Grandi, opposed the sale, too.

Former ambassadors to Italy, among them Alex Himelfarb, who was clerk of the Privy Council before he moved to Rome 2006, also argued that a B-list power such as Canada needed an elegant property to give it A-list drawing power. "The bottom line is, for a mid-sized country like Canada, every advantage helps and this residence is unquestionably an advantage," Mr. Himelfarb said when he was ambassador.

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The government of Prime Minister Justin Trudeau adopted the same view. Mr. Pickerill said the villa "is used across every single one of our objectives. It's like another member of our diplomatic corps and pays dividends for our efforts across a range of issues."

But he said not all of the official residences and embassies are sacred. "We will own where it makes sense, rent where it makes sense and sell where it makes sense, taking into account the historical value of our properties," he said.

The Conservative government at the time argued that the villa was not part of the war reparations paid to Canada, suggesting that Canada had no moral obligation to keep it.

But a book called Canada and the Cost of World War II, written by Robert Bryce, a former deputy minister of finance who died in 1997, says Canada shortly after the war used $1.3-million in "nominal" war reparations payments from the Italian government "for the purchase of property [in Italy] or for scholarships for Canadians studying there." One of those properties was Villa Grandi, which was bought for $186,000, although the villa is not specifically mentioned in the book.

The villa is named after Dino Grandi, the foreign minister of Benito Mussolini who played a key role in the fascist dictator's downfall in 1943, the year of the Allied invasion of Sicily and the Italian peninsula. On the market for about two years, the property attracted few serious bids because, as a listed historic site that sits on the ruins of an ancient Roman villa, it cannot be substantially altered.

While Villa Grandi has been saved, the Conservatives managed to sell many high-profile diplomatic properties before they were voted out. They included official residences in Mexico City, Detroit, Seattle, Washington and Brussels.

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In 2014, the official residence in the Norwegian capital of Oslo sold for $12.5-million after two years on the market. Ottawa's $20-million asking price was front-page news locally when the property first went on sale. The relatively low sales price fuelled accusations the Conservatives were unloading properties at fire-sale prices.

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