Kiama Council general manager Michael Forsyth said under the council's redevelopment plans, the house would take on a new role.

"If restored, Barroul House could become a cafe or common area, or office space for staff," he said.

Kiama's Tony Clapham took up the fight in 2006, concerned it would become a victim of "demolition by neglect".

Currently, metal poles support the rotting pillars lining the verandah.

Mr Clapham said he wholeheartedly supported the move.

"It's one of the most important historic houses in Kiama," he said.

"If the restoration is done by the council, it will be much more locally-minded than if the Department (of Health) did it - the more local, the better."

Jamberoo resident and Kiama and District Historical Society secretary Sue Eggins said despite petitions and meetings with state ministers, activists had achieved little success until now.

"The Department keeps fobbing us off," she said.

"It would be excellent if the council took it over."

Thomas Surfleet Kendall built the Georgian-style house from plastered basalt rubble in 1857.

He also moved his wife, Caroline, who was one of the legendary orphaned Rutter sisters, and their nine children into the house.

When their eldest two daughters died young, the Kendalls also raised nine of their grandchildren in the house.

The Department of Health bought the property in 1928 and from about 1930, it served as the nurses' quarters, the matron's residence, the hospital's physiotherapy department, home of counselling services, and now as hospital storage.

Kiama Meals on Wheels also used the building as its meal preparation headquarters, but mould and mildew forced the group out three years ago.