The old Woden CIT campus will be used as a 1100-space temporary car park during construction on the half a billion dollar Canberra Hospital upgrade.
Urban Renewal Minister Rachel Stephen-Smith made the announcement on Friday morning, ending months of speculation about the site's immediate future.
The long-term use of the land remains up in the air, although Ms Stephen-Smith has reaffirmed that the block - which is bounded by Hindmarsh Drive, Ainsworth Street and Albermarle Place - will remain zoned for community purposes.
Work will start in the coming months to demolish the site's old buildings, which have been vacant since the campus' closure in 2018.
Construction of the new car park was expected to start in the middle of the year, and be ready to open before "main works" on the so-called SPIRE centre project start in 2021.
Ms Stephen-Smith said the extra 1100 spaces would be primarily for hospital staff, who will be able to catch a dedicated shuttle bus from the car park to the hospital. Construction workers and hospital visitors would also benefit, she said.
"We have designed this solution to boost Canberra Hospital parking availability for staff, visitors and construction workers during this busy expansion period for the hospital," she said.
Ms Stephen-Smith said the government would continue to examine longer-term car park options for Canberra Hospital, in consultation with staff, patients and local residents.
Woden Valley Community Council last year urged the ACT government to hold off on demolishing the CIT campus until it had developed a firm plan for the site's future.
The council's president, Fiona Carrick, aired similar concerns on Friday, saying the government was "putting the cart before the horse" by committing to demolishing the buildings before it had finalised a masterplan for the hospital and wider Woden precincts.
Ms Carrick again urged the government to consider refurbishing the buildings and incorporating them into a wider "allied health" hub, which would be anchored by the hospital.