The institute, which is on Victoria's Heritage Register and marked its 150th anniversary last year, has been closed to the public for about four years.

It is awaiting restoration after the council approved $870,000 for the works and $130,000 for landscape design and fit-out works.

Council acting chief executive Dale Thornton said the council had conducted a six-week community consultation process earlier this year and continued to work closely with the KMI operational group.

The group includes includes representatives from the Kyneton Historical Society, Friends of the Kyneton Mechanics Institute, Kyneton Senior Citizens, Kyneton Connections, the Department of Sustainability and Environment, and the National Trust.

President of the Friends of the Kyneton Mechanics Institute, Michael Kennedy, believes the community should be included in any decision about the use of the institute hall that was once the heart of Kyneton.

It is believed the Kyneton Historical Society and Kyneton Senior Citizens will be the main tenants. The Friends, however, wants the institute to be restored as a fully functional theatre with an "orientation" for young people.

"What we have been struggling with for over a year is to get the council to allow the community to be involved in deciding on the future usage of the hall.

"All we are fighting for is an alternative to what the council has proposed. We asked council to allow the community to become informed and involved in the decision," Mr Kennedy said.

He said the group hoped to organise an open day when proposals of the council and the Friends group could be compared properly.

"Young people are at a loss on weekends and after school hours in Kyneton. This (a theatre) would give them the opportunity to use it. An open day would put both sets of plans up there and then let the community decide."

Mr Thornton said more information would be provided after the council meeting tomorrow.

"The council is committed to ensuring the works will reopen the building for public use and in particular provide for the Kyneton Historical Society and Kyneton Senior Citizens Club, as well as ensuring the meeting spaces, hall and stage are available for use by community groups, organisations and private functions."