Councillors "misread" what Warrnambool wanted when it vote to carry out a business case on the iconic site, Monday's ordinary meeting was told.

A unanimous vote of six councillors in front of a packed gallery of more than 80 people brought the saga to an end.

Cr Richard Ziegeler said the vote meant the idea of an art gallery on Cannon Hill would now be "forgotten". "We won't have to worry about Cannon Hill being built on," he said.

Cr Ben Blain labelled doing a business case for Cannon Hill a "disappointing decision". "I believe community dissatisfaction over the location of the business case was clear very early on even before we voted," he said.

Cr Blain said consultation wasn't carried out well, and the council "misread" what Warrnambool wanted. "The report's come back and it's said what we all knew, it wasn't viable to build an art gallery there," he said.

"I do support not pursuing Cannon Hill as a site for an art gallery. I didn't support it from the start and I don't support it now."

Cr Blain said he didn't agree with spending another $65,000 of ratepayers' money on a second business case after spending state government and council funds on the first - especially in the current climate of cost of living pressures.

His comments were met by applause from the crowd, some of whom were wearing green Hands Off Cannon Hill T-shirts.

Cr Ziegeler said he had voted against doing a business case for an art gallery at Cannon Hill in August 2022 because he remembered the public indignation when it was suggested in 1981 a new performing arts centre should go there.

"I also had personal misgivings about that iconic space being ruined," he said.

"We don't have to put it at Cannon Hill. It has confirmed to me just how iconic and just how important that particular open space is to the people of Warrnambool - as if I needed it confirmed.

"The opposition has been very plainly spoken."

Cr Ziegeler said any idea of building an art gallery at Flagstaff Hill Maritime Museum would probably also come with the same financial and geographical problems as Cannon Hill.

But he supported a new business case - which was needed if it wanted to get government funds for a new gallery - so the city's "priceless" works in Warrnambool's art collection could be preserved.

Cr Angie Paspaliaris said the business case found an art gallery at Cannon Hill was not viable with its $70 million-plus price tag.

"A business case has very much determined that it's not good business, with all things considered, to build a new art gallery at Cannon Hill," she said.

Cr Paspaliaris said she was concerned the council had not thoroughly "picked apart the community's collective brain" about alternative sites.

Mayor Debbie Arnott said there was no doubt Warrnambool needed a new art gallery for its valuable collection. She stressed she had supported the "business case only" for Cannon Hill as a way of looking at alternatives. "It was about trying to be inspirational," she said.

Cr Arnott also said the council needed to have a second business case in its repertoire. "Treasury will not look at anything without that second business case. So this pursuit of a business case at Cannon Hill has not been in vain," she said.

Cr Arnott also pointed to the success of the Bendigo art gallery which brought in 223,000 visitors to the city and injected $67 million to its economy.

"Why can't we at Warrnambool have a slice of that?" she said.

"It's about trying to put Warrnambool on an international map."

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