Whitlam arrived at Ngara, at 46 Rowland Street in Kew, to be met in the front garden by the owner of almost six decades, Grace Swinnerton.

"He didn't even get near the front door," chuckled the neighbour. "Old lady Swinnerton was a member of the Liberal Party, and there was no way she was letting a Labor prime minister in the house."

Another member of the Liberal Party showed a little more compassion on Thursday, and a backflip from Planning Minister Matthew Guy has stopped the destruction of Whitlam's birthplace.

On Wednesday morning Mr Guy called a Melbourne radio station to protest at the suggestion he could stop the destruction of the Whitlam home.

"Once the council gives a consent order for a demolition, that's it," Mr Guy told 3AW. "There is nothing I can do once it's over."

That evening – in the wake of articles published by The Age – Mr Guy wrote to the Heritage Council, advising it he had applied for an interim protection order on the property.

"Yesterday, I applied for an interim protection order, under the Heritage Act, for the birthplace of Gough Whitlam," Mr Guy confirmed on Thursday. "I am advised that the Heritage Council has today made an interim protection order."

Mr Guy said Mr Whitlam was "widely acknowledged to be one of the most significant Australian political leaders of the 20th century".

"As his birthplace, it is likely that the cultural significance of this house will become recognised more strongly as time passes," he said.

The interim protection order would be issued while the nomination of the house to the heritage register proceeded, Mr Guy said, to allow "for a fresh consideration of its cultural significance, given prime minister Whitlam's recent passing".

Demolition of Ngara had already started by the time Mr Guy signed the application – the day after the former prime minister died aged 98 – and it is not yet known how much damage has been done to the Federation cottage.

Ngara was purchased by overseas buyer Youquing Liang for $3.3 million in November 2013 after Ms Swinnerton died at the age of 98. The new owner has about a year to level the property and construct a new residence, or face potential difficulties with the Foreign Investment Review Board.

Mr Guy's decision leaves a legal quandary for the new owner, and a past precedent suggests recompense may be difficult to obtain.

Former planning minister Justin Madden provided a similar interim order for a Balaclava home in 2007, after demolition had begun. The new owners appealed to the Victorian Civil and Administrative Tribunal, but ended up having to foot the bill for the damage their demolition team had done.

Ngara was built in 1915 by Whitlam's grandfather, master builder Edward Maddocks, and named after an indigenous word of the Darug people of Sydney that means "to listen, hear and think".

State Labor leader Daniel Andrews said the man himself may not have been bothered by the controversy.

"I would imagine Gough Whitlam, being the humble man he was, would much prefer the taxpayers' money to be invested in health and education, not a house he lived in for some eight months as a boy," he said.

Neighbours, who gathered out the front to celebrate the decision on Thursday, disagreed. "It's a great day," said one. "It politics, it's not often you see common sense prevail."

Boroondara resident Victor Abel was overjoyed when he heard the house would be protected.

"I cried when I heard it was going to be demolished," he said, tears in his eyes.