"While the Town Hall holds a special place in the hearts of so many Christchurch people, it was important that this decision made sense financially," she said.
"After careful consideration, this was the most cost-effective way to restore an important civic and performing arts facility to the city and we're looking forward to construction beginning."
Most of the building's damage was caused by liquefaction and lateral spreading of the ground towards the Avon River.
It dropped 300mm in some areas and up to 600mm in others.
A number of options for the future of the Town Hall were considered, including partial restoration or building a new facility.
The recommendation to fully restore was based on a business case carried out by Deloittes that identified it was the most financially viable option that would also provide the fit-for-purpose civic, cultural and performing arts facilities a city the size of Christchurch needs.
A total of $127.5m has been budgeted for the restoration.
It will be partially funded by a $68.9m insurance contribution, with ratepayers contributing the balance of $58.6m. To receive a full insurance payout, the council had to restore the Town Hall in its entirety.
Liam Nolan, unit manager of anchor projects, said the council had done a significant amount of pre-restoration work to determine the level of risk associated with the project.
Tenders received for the repair and refurbishment gave the council certainty that the project could be delivered within the $127.5m budget.
"We are confident that the project will be brought in on time and on budget," Mr Nolan said.
"The repair method that has been chosen will see the building's foundations significantly strengthened, ensuring the Town Hall can be used and enjoyed for the next 50 years."
The restoration work includes repairing and strengthening the Town Hall to 100 per cent of new building standard as well as a significant upgrade and refurbishment of the facility.
It includes a "possible reconfiguration" of the James Hay Theatre, which was criticised in the past for its poor acoustics that weren't up to scratch for modern music concerts.
Residents had their chance to have a say on whether the Town Hall should be restored as part of the council's 2012/13 annual plan.
Following overwhelming support from the public to restore the Town Hall, the previous council agreed to repair the existing facility to 100 per cent of new building standard.
