A developer has reportedly met with the Victorian government to discuss buying and restoring the Palace Theatre as a live-music venue.



The claims were made by Music Victoria's chief executive Patrick Donovan on Tuesday during Melbourne City Council deliberations on whether to consider bestowing the century-old theatre with heritage protection.

Palace Theatre in Bourke Street. Credit:Michael Clayton-Jones

"It could be the white knight," Mr Donovan said, adding that the company had previously restored theatres in the United States and United Kingdom.

The current owners of the Bourke Street building have an application before council to demolish the former concert hall and nightclub and build in its place a seven-storey boutique hotel.