The 142-year-old building was to be sold today, after council city property manager Robert Clark last month said it was "surplus" to council requirements.
Instead, the decision to shelve the planned auction was confirmed by council chief executive Paul Orders in a media statement yesterday.
He said the decision was made because no formal resolution authorising the sale of the building had been passed by the council, and councillors needed more time to "fully consider its future".
Mr Clark had been authorised to investigate the sale of the building at a meeting of the council's property subcommittee late last year, council minutes showed. However, at a subsequent subcommittee meeting in April this year, it was decided councillors needed a report on the strategic issues around any sale, before one proceeded.
Mr Clark said yesterday that requirement had been "missed", and some councillors were worried about the pending sale.
"There are a number of councillors who have shown some concern about it, so we have decided to put it before councillors again," he said.
The Athenaeum and Mechanics Institute building is near the Regent Theatre, and was bought by the council from the Athenaeum Society for $1.13 million in October 2007.
At the time, the council said the land could be a site for an 800-seat theatre or incorporated into a cultural sector associated with the Regent Theatre. However, the building was instead put on the market last month, as Mr Clark said at the time "it has been agreed that there are no advantages to retaining it".
Cancelling the auction would allow the "procedural issue" to be resolved, "just to make sure we're doing everything right", Mr Clark said yesterday.
It would be up to councillors to decide whether the building would still eventually be sold, but there had been "a lot of interest ... as you would expect", he said.
The building has three tenants, two café-bars and the Athenaeum Society library.
It generated rental income of $63,500 a year, excluding GST, had a rateable value of $1.25 million and a land value of $980,000.
Mr Orders said the building's future would be decided at an extraordinary council meeting, although a date was yet to be announced.
