Until now the Austrian National Bank has kept 80 percent of its 280 tonnes of gold, worth around €8.6 million ($9.3 million), in London.
But by 2020, the Bank of England's stock of the precious metal will be reduced to 30 percent, while Austria will hold 50 percent and Switzerland 20 percent.
The central bank said it took the decision after recommendations made by the Austrian Court of Audit in February, which warned of a "heightened concentration risk" linked to storing the majority of its reserves in Britain.
At the time, the bank had argued the policy was warranted because London was a major international centre for the gold trade.
However, the bank changed its mind after reviewing the court's advice to diversify storage locations.
Vienna confirmed it would begin to gradually repatriate 92.4 tonnes this summer. A further 47.6 tonnes will be transferred from Britain to Switzerland.
Austria's move echoes an announcement by Germany in 2013, which said it would repatriate all of its gold stocked in France as well as some of the reserves held in the United States, to ensure at least 50 percent was kept on German soil by 2020.
Meanwhile, Swiss voters rejected a proposal in late 2014 to force the central bank to bring back gold reserves from Britain and Canada.