The massive project’s first phase will cost $US45 billion ($A58.46 billion) and take up to seven years to complete.
Housing Minister Mostafa Madbouly announced the plan at the opening of the three-day international economic conference held in this resort city and attended by hundreds of business executives and world leaders.
The aim, he said, was to alleviate congestion and overpopulation in Cairo over the next 40 years.
By that time, Cairo - currently home to nearly 20 million - would have doubled in size.
The first phase of the ambitious program, Madbouly said, is an expansion of the current outskirts of the capital to the east, adding an additional 105 kilometres of development.
The area would be a new administrative centre including government offices, diplomatic missions and housing as well as universities, a technology and innovation park, and thousands of kilometres of roads.
Madbouly did not say what the new administrative centre would be named.
The military has already began constructing the road linking Cairo to the new planned administrative heart of the capital, he said.
Eventually the new capital would expand to 700 square kilometres in size, much of it green spaces, linking up with the Suez Canal zone, Madbouly said, calling the project a source of "pride and inspiration" to young Egyptians
The ambitious plan is the latest mega project planned by the government, headed by President Abdel-Fattah el-Sissi, who elected in June last year.
The other mega project is the expansion of the Suez Canal and the creation of an industrial zone around it.