The recommendation was made in response to an independent review into the Australian Pesticide and Veterinary Medicines Authority that found "serious and systemic issues" with its operations, conduct and governance.
The organisation was relocated to Armidale in 2019 following a decision by Mr Joyce, who was agriculture minister at the time and also the local MP for the regional town.
Agriculture Minister Murray Watt said the pesticides regulator would not relocate back to Canberra, but staff would no longer be required to be based out of Armidale.
"The disruption and chaos caused by Barnaby Joyce when he forcibly relocated the APVMA to his local electorate put a massive strain on the staff at the regulator, and according to the independent review 'has had serious impacts on the performance and culture of the APVMA," Senator Watt said.
"We will not be making the same mistake. The APVMA will remain in Armidale, giving certainty to local workers and the local community."
Australia's peak agricultural chemical regulator was moved to Armidale by Barnaby Joyce. (Bianca De Marchi/AAP PHOTOS)
Among the 33 recommendations put forward by retired senior public servant Ken Matthews in response to the independent review included abolishing the organisation's board and other changes to the body's structure.
Senator Watt said the government supported many of the recommendations.
He indicated revoking the order requiring staff to be based in Armidale would provide certainty.
"This move will ensure the APVMA can deal with existing recruitment challenges and get the best people for the job, regardless of where they live," he said.
"Removing the order brings the APVMA in line with every other federal agency and recognises the fact that a number of current APVMA staff are not based in Armidale.
"It's been a tumultuous time for APVMA staff and management and they've been working hard to implement changes and improve their culture and performance."
The federal government will outline its full response to the recommendations in the middle of the year.
