The suburban Melbourne house used to film The Castle may have been saved from the threat of being demolished, with a proposed plan to move it to New South Wales.

Federation Council administrator Mike Eden said the house would likely find a new home in Corowa, not far from Albury.

"It is a pretty important part of Australian film history and Australian comedy history, so [the move would be] a really good result if we can make it happen," he said.

Mr Eden said a local tourist venue, the Corowa whisky and chocolate factory, wanted to relocate the house and turn it into museum.

He said the theme of the museum would be "Australian comedy in general, with the theme of The Castle … running through."

"We've also been looking at other opportunities to use the building, such as where the bride and groom may get changed before they have their wedding at the venue there at the top of the whisky factory in Corowa, maybe a bridal suite in one of the bedrooms," he said.

"So there's a whole lot of ideas we've been putting to the people that would be housing and funding the project, because it won't be funded by the council."

Mr Eden said while the deal had not been officially signed yet, "in principle [it] has been done."

The original location of the house is next to Essendon Airport in the Melbourne suburb of Strathmore, and its present owner wants to redevelop.

The story turned into a saga when the Moonee Valley Council rejected a proposal for heritage protection for the house.

The house that featured in the Australian movie The Castle. ( ABC News: Sarah Farnsworth )

Mr Eden said along with the factory, the Australian Institute of Comedy would also help with funding.

He said the hope was for it to become a commercial tourist attraction, and they expected the move to cost about $20,000.

"The costs aren't prohibitive in the scheme of things, and we're hoping it pays for itself in the long run," he said.

"[They] would be obviously applying for grants and what not from other government departments," he said.

Mr Eden said the owner of the house was happy it had been saved from being demolished.

"I think it was pretty important to her that it went to something like a museum where the general public can come and have a look … that it didn't just end up in landfill," he said.