Mortlake Community Development Committee president Kelvin Goodall said he couldn't make a definitive statement until a final meeting with council officers on Monday, but he believed MCDC had "saved the back room".

"It appears council has agreed to back down," he said.

"I've got a meeting on Monday with senior council officers to deal with the details of where the library hub will go within the existing library building."

If the council did relinquish its claim to the community room it would be a major turnaround since May, when council officers told MCDC it had to be out of the room by the end of June.

At the June monthly council meeting community and corporate services director David Rae emphasised that council officers had explored other locations for the hub, but all the alternatives were impractical and expensive.

The council even started moving new furniture into the room in mid-June, angering some Mortlake locals.

Mr Goodall was coy on Thursday about why the council had capitulated, but when he spoke to The Standard in June he had said he believed the council had no legal basis to terminate MCDC's lease.

In the agenda for the June meeting, the council clearly stated it was "legally able to terminate the existing lease", however the basis for that assertion was never addressed at the meeting.

After councillors voted six to one to end the lease, MCDC hired a Warrnambool law firm to send a letter to the council arguing the termination was not legal. In response the council engaged Melbourne-based law firm Maddocks.

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Mr Goodall said the council then withdrew its May 10 letter announcing the lease termination, but reserved the right to pursue the matter.

"Then nothing happened for a while until I got a call from acting mayor Daniel Meade wanting to have a chat," Mr Goodall said.

He said Cr Meade wanted to find out whether a compromise could be reached between MCDC and the council.

"We've had a couple of meetings since then and have reached the stage where I think we've achieved a good compromise," Mr Goodall said.

Moyne Shire chief executive officer Brett Davis told The Standard a "lengthy legal process (wasn't) in anyone's interests" and he was pleased with the discussions with MCDC, but he emphasised nothing had been signed off.

"Nothing has been formally agreed to date and further meetings between MCDC and Moyne Shire Council are planned for the coming week."

It appears the hub will have to be located elsewhere in the Mortlake library building.

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