Shellharbour City Council will begin relocating the Freedom Wall outside the old Warilla council chambers next week.
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It follows the recent sale of the former chambers and Warilla branch library for $4.05 million to CEL Superannuation Fund.
A total of $2 million from the sale proceeds will be allocated for construction of the controversial $57 million City Hub project, while the remainder will be used to develop a new branch library somewhere in Warilla.
The wall has 114 plaques placed by families, clubs and organisations in honour of the area's servicemen and women.
It was unveiled in 1995, 50 years after the end of World War II and is located in a grove which includes a tree propagated from the Lone Pine at Gallipoli.
The plan to remove the memorial sparked outrage at the end of 2013, but now the Warilla and Albion Park RSL sub-branches have identified community land on the corner of Lake Entrance Road and Benaud Crescent as an appropriate alternative location.
Warilla RSL Sub-Branch president Don Briggs said the "best outcome by negotiation has come about - although we had to drag [the council] to negotiations".
Shellharbour Mayor Marianne Saliba said collaboration with ex-services club representatives had been invaluable in "the sensitive process" of planning for the relocation of this monument.
The prominence and visibility of the new site made it the ideal location, Cr Saliba said.
"The site also lends itself to more seating, lighting and gardens suitable for people to reflect and contemplate."
Shellharbour Council said the design of the new wall would replicate the existing one, but use more contemporary materials and colours.
"Draft designs will be made available for the community to comment on once preliminary planning works are complete," Cr Saliba said.
The tree descended from the Lone Pine in Gallipoli is being assessed with plans to transplant it in the new gardens and make it a key element of the memorial site.
The council said the condition of some of the inscriptions on the existing plaques had deteriorated to a state that made it difficult to transcribe wording accurately.
Families of servicemen and women whose names appear on the wall are invited to contact council to clarify the wording of individual plaques.
The wall is expected to be constructed early in 2015.