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Plans by the owners of Melbourne's Festival Hall to have the site redeveloped with two apartment towers have received a significant setback with the venue being added to the Victorian heritage register.

In January, the venue's owner, Stadiums Limited, announced plans to sell the site, lodging plans with the City of Melbourne to demolish most of the building and build two 16-storey buildings on the site.

Stadiums Limited cited increased competition from larger and newer venues in Melbourne as impacting the ongoing financial viability of the 63-year-old building.

However in May, Heritage Victoria recommended the venue - which hosted The Beatles' Melbourne concert in 1964 - be added to the heritage register in recognition of its social and cultural significance to Melbourne.

In a decision last week, Heritage Council Victoria ruled that the building should be listed on the register as a place of "cultural heritage significance" to Victoria.

A statement explaining the decision advised "Festival Hall was a principal live music venue in Victoria from the 1950s until the 1980s and hosted some of the most important national and international musicians of that era.”

Six key features of the interior of the building were identified as "intrinsic to its cultural heritage values", including the timber floor, its tiered seating and "highly intact original amenity areas".

The site was originally home to the West Melbourne Stadium, constructed in 1913, but after a fire in 1955, the building was reconstructed and renamed Festival Hall.

The venue hosted boxing and gymnastic events during the 1956 Olympics, going on to stage international music acts such as Frank Sinatra and Fleetwood Mac, and more recently the Red Hot Chili Peppers, Ed Sheeran and Lorde.

Commenting on the decision, Victorian Planning Minister Richard Wynne said the heritage listing did not stop redevelopment, but did restrict it.

Minister Wynne advised “important elements of Festival Hall will have to be retained, including the facade, the box offices, the tiered seating, and the developer will need to work with the Heritage Council to ensure that any future development of the site respects the rich heritage of Festival Hall.

"It means that it can be redeveloped, but it has to respect the heritage of what is one of the most iconic buildings in Melbourne."

One of the owners of Festival Hall, planning barrister Chris Wren QC, said the venue will no longer be able to host concerts.

Wren told ABC Radio Melbourne "it's not going to be able to continue to operate, it's probably going to become a warehouse or something like that in due course.”

Wren stated his concern that at the ongoing investment in upgrading other inner-city venues by Victorian Government, adding "it's difficult because of the fact that the State Government has spent hundreds of millions of dollars building competition for us - and then to expect us to continue to operate as a private enterprise is unrealistic.

"If they want it to continue then perhaps they should buy it at the highest, best price, and we'd be happy to sell it to them."

Images: Concert at the Festival Hall (top) and an artist's impression of two apartment towers proposed to replace the venue (below).

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