Vienna (AFP) - Austria's government submitted Friday a law to seize the house where Hitler was born, in a bid to stop the building becoming a neo-Nazi shrine.

The large corner house in the quaint northern town of Braunau am Inn near the German border where the Nazi dictator was born in 1889 has been owned by the family of a local woman for more than a century.

In 1972 the government signed a lease with the owner and turned it into a centre for people with disabilities, but the arrangement came to an abrupt end five years ago when she refused to grant permission for renovation works.

The government said on April 9 it decided to seize the property, with the building -- which cannot be demolished because it is in the town's historic centre and therefore under heritage protection -- empty since 2011.

"Representatives of the interior ministry have been trying for several years to buy the property, but these attempts failed... Now the only option is to transfer ownership to the Austrian Republic through expropriation," the interior ministry said on Friday.

The owner, who is shy of talking to the media, will receive "adequate compensation," it said in a statement.

The issue has sparked heated debate among Braunau's 17,000 residents. Some want it to become a refugee centre, others a museum dedicated to Austria's liberation and others demolition.

Outside there is a stone memorial that reads: "For Peace, Freedom and Democracy. Never Again Fascism, Millions of Dead Warn."