Waimate Mayor Craig Rowley said the $1.925 million building would provide an essential community hub and much-needed upgrades to the council chambers.
The upgraded library at 125 Queen St will include an information centre and dedicated learning areas for classroom and education activities for larger groups.
He said libraries were no longer just a place to borrow books; they formed an essential service as a community hub.
"It’ll be a modern facility that will suit the needs of the residents much better."
The combined library and community complex is expected to be built by the end of the year, $900,000 coming from the government’s Better Off Funding package, which the council received late last year.
Following a tender process, the contract was awarded to local business Hayden Tait Building Limited, while Timaru-based company Rushton Architects has been engaged to design, tender and manage the construction elements of the project.
Mr Rowley said the existing library "did not meet health and safety standards".
The council chambers would be upgraded to address the poor light and airflow, create a multi-functional space and future-proof the area to meet the changing technology demands of local authorities, including the ability to livestream council meetings, he said.
The need for the library expansion was a necessary one for the growing community, Mr Rowley said.
"When there are kids classes, we can only have one at a time. We need more room," he said.
"More migrant workers are using the computers too. It’s a well-used facility."
While the rebuild is happening in the council chambers, council meetings will be held in the Waimate Event Centre in Paul St and a scaled-down version of the library will function out of the club room in the event centre.
"Having a fit-for-purpose library is essential to any community, and council think it is time to hit the green light and move the district forward," Mr Rowley said.
"We are confident that we can deliver the building on time and on budget".