The main building at Waiora House in Taupō is to be demolished.
The former maternity home housed a number of social service and community groups and was closed after the discovery of asbestos containing materials last August.
Taupō mayor David Trewavas said while the site was stable, industry experts had expressed grave concerns about the building being left in its current state for any length of time.
They met with the council as the building owner, and its tenant the Waiora House Trust, and all had agreed demolition was the best option going forward.
"There is still a number of materials containing asbestos in the building and trying to remove it all and reinstating the building will be costly and time consuming," Trewavas said.