Councillors have voted 7-1 to begin demolition of the community hall despite an appeal to VCAT and a ruling from Heritage Victoria still pending.

For more than five years the shire has been trying to build a bigger library in Yarrawonga at the town hall site, but the attached community hall must go for the project to come to fruition.

It recently scored another $1 million from the state government and recent changes to Victorian planning provisions means approvals for projects under $10 million can be fast-tracked to stimulate economic activity post COVID.

The redevelopment is estimated to cost close to $5 million and council has a further $3.75 million available for the project.

Councillors used the urgent general business section of last week's meeting to vote on finalising designs of the new library and put the project out to tender once planning approval was secured.

The motion moved and seconded by Cr Peter Ellliott and Cr Peter Mansfield also gave the green light for the community hall's demolition.

Cr Kevin Bourke voted against due to the VCAT and Heritage Victoria matters being unresolved.

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Community action group spokesperson Jeanette Wilson confirmed VCAT hearings were scheduled for July and September.

"The planning provision amendment that removes a community's right to even be informed of council projects of less than $10 million, let alone the right of appeal, is absolutely disgusting," she said.

"Our appeal was in before the minister changed it all and VCAT had served its order.

"We had a stand at a Yarrawonga market recently and 70 of the 74 people who approached us believed the library should not be built at the town hall and community hall not be demolished."

Cr Elliott said council had "ticked all the boxes" and the project should start.

"I nominated for council to support projects like this one and truly believe the majority of the electorate want it to happen," he said.

Mayor Libro Mustica said the project aimed to create a vibrant and diverse community hub in Yarrawonga.

"This project has been in the planning stages for a number of years and during that time we have been working closely with user groups of the existing community hall and precinct to incorporate, where possible, the services and facilities they want into the new designs," he said.

"We understand and acknowledge there are a small group of community members who are against this development.

"However the majority of people we have surveyed, spoken to and heard directly from are fully in favour of the library project and can't wait to see it commence."

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