Part of the old Queen Mary Hospital in Hanmer Springs will be kept in public ownership following an agreement between the Hurunui District Council and the Government.
The hospital was formerly home to a residential drug and alcohol addiction service, which closed in 2004.
The site is owned by the Canterbury District Health Board and dates back to the establishment of a Soldiers Hospital in 1916.
The Hurunui District Council has been negotiating with the DHB and Ngai Tahu to acquire part of the site for an historic and recreation reserve.
The Hurunui District Mayor, Garry Jackson says the Government has now agreed to secure six hectares and vest the land with the council.
He says the agreement means the council can now use the $3.4 million it had set aside to buy the land towards the development, restoration and maintenance of the buildings.
Three listed heritage buildings
On Friday the Prime Minister and Minister for Arts, Culture and Heritage, Helen Clark, announced that the ownership of the hospital would be transferred from the Canterbury DHB to the Department of Conservation.
The three listed heritage buildings include the Nurses Home (1929), the Chisolm Ward (1926) for female patients and the original Queen Mary Hospital (1916) for wounded soldiers, known as the Military or Soldiers Block.
It was regarded as a key military hospital for returned soldiers from World War 1 and World War 2 and is the only intact example of its type of military design used for hospitals in New Zealand during World War 1.