Built in 1954 to help power Amcor's now-closed paper mill, the towering Boiler House is full of asbestos, covered with graffiti and derelict.

Heritage Victoria says it's a structure of technical and architectural significance, but Planning Minister Richard Wynne has dismissed it as an "eyesore" that "needs to go".

And for the first time, Mr Wynne has used his powers to overturn a recommendation that the building be heritage listed, spelling doom for the 63-year-old structure.

It's the first time in 10 years a Victorian planning minister has overruled a call by Heritage Victoria to preserve a building.

Heritage Victoria recommended the Boiler House be preserved as a structure of technological and architectural significance.

The agency said the building's bold, five-storey glass and metal facade is Melbourne's first significant example of curtain walling (a non-structural covering of a building), making it an influential piece of the city's built heritage.

"As an example of post-war industrial architecture, it was highly innovative in its adoption of a transparent skin to reveal the machinery contained within," Heritage Victoria said in its assessment last year.

The argument failed to convince Mr Wynne.

"The old power station is an eyesore, a relic of the past and needs to go," he said.

Is "ugly" architecture worth saving? Photo: Daniel Pockett

Mr Wynne's decision was welcomed by the Alphington Paper Mill Action Group, a residents' group that had urged Heritage Victoria not to seek to protect the "unattractive" building.

But others argued it set a troubling precedent.

"It's extraordinary that the minister should use ugliness as a criteria for not listing a building that has been found by experts to be of architectural and historical significance," said Rohan Storey, vice-president of the Melbourne Heritage Action Group.

Mr Storey said opinions about whether architectural styles were pretty or ugly were subjective and subject to change.

Stephen Jolly, a local councillor with the City of Yarra, where the building is located, said it was a mistake to tear the Boiler House down, even though some in the community hated it.

"We're not talking about the Taj Mahal here or the Pyramids, but there should be some recognition that this was one of the major industrial workplaces in Melbourne for decades," Cr Jolly said.

The last time Heritage Victoria was overruled was in 2007, when then planning minister Justin Madden gave the Scot Church permission to demolish the art deco Victoria Car Park.

Other heritage-listed buildings considered "ugly" by opponents include BHP House, Victorian State Offices, 15 Collins Street, National Mutual Plaza and the IOOF Building.

The former Alphington paper mill site under development. Photo: Joe Armao

The decision paves the way for the near total demolition of the former Amcor paper mill for the development of "Tesla town", a $2 billion solar-powered suburb of 2500 homes on a 16.5-hectare site on the northern bank of the Yarra River.

Mr Wynne said community views had influenced his decision.

"The Alphington community has spoken and we've listened," he said.

"This decision will pave the way for the dangerous, asbestos-ridden Boiler House to be demolished and replaced with new homes, parkland and open space."

He listed several other heritage-listed examples of curtain walling in Melbourne, including ICI House on Nicholson Street in East Melbourne and the Olympic Swimming Pool on Batman Avenue.

But Cr Jolly argued that with imagination the Boiler House could have been repurposed into a building that would have increased the value of the former Amcor site.

The site sits in the state seat of Northcote, which will have a by-election on November 18 that is expected to be a close contest between Labor and the Greens.

Greens planning spokeswoman and upper house MP Samantha Dunn said Heritage Victoria had got it wrong in recommending heritage listing for the Boiler House.