The idea was suggested on Wednesday by Cardiff West MP Kevin Brennan at Welsh questions.
Prime Minister David Cameron agreed to the move and has said that he is fully supportive of the team's participation in New Zealand.
"Wales are the last home nation competing in the Rugby World Cup and I wish them every success in the semi-final against France on Saturday," he said.
"We would only usually fly a home nation flag for a final, but I know how important a competition this is and we all want to get behind Wales, so I've decided to break with tradition on this occasion and fly the flag for Wales in Downing Street on Saturday."
Warren Gatland's side reached the final four after they beat Ireland in the quarter-finals.