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One small part of the historic former Cadbury site is to be retained, despite plans to build Dunedin's new $1.4 billion hospital there.

The Ministry of Health yesterday confirmed the Cadbury dairy building in Castle St will stay.

That means not just its recently restored facade, but the building in its entirety.

The ministry bought the Cadbury land last year, and while the rest of the block, including the facades on Cumberland St, look set for demolition, the ministry says it has noted the high level of heritage interest in the dairy building.

Before the site was sold, company owner Mondelez International had been planning to spend $7 million to redevelop the old dairy.

It was going to use the building to house Cadbury World, the company's tourist attraction, which it was to move from its Cumberland St location.

The announcement of the sale of the former chocolate factory site to the Government meant the proposed Cadbury World development project became a non-starter, but Mondelez decided to continue reinstating the old building's heritage facade.

The facade was restored to a design based on the 1930s Cadbury Fry Hudson era, and the finished product revealed last year.

A ministry spokeswoman said yesterday the building, in its entirety, would be retained.

"We know there is a high level of heritage interest in retaining the building, so we've been mindful of that in the design process."

The building could be re-used for administrative or other non-clinical purposes, and the design process would look at the options.

The ministry's planning did not suggest that would have an impact on any potential future site expansion.