Mr Shanahan said that, in the interests of safety, the decision was made to place the piece onto the sea floor.
There was already a fair crack in the 350 tonne block which could have compromised the lifting attempt. "Work is now underway to reset the starboard rigging before lifting can recommence."
The block is sitting behind Motiti Island, four nautical miles from the initial wreck.
Mr Shanahan said rusting and disintegration would have played a part.
"But the accommodation block was identified as a part of the wreck that would degrade and break down which is why we are removing it.
"We want to eliminate future potential risks before they wash ashore.
"We will get it up on the barge with a lot of patience."
Mr Shanahan said they had cleared the contents inside the accommodation block three months ago, to prepare for this week's move. The block was cut and removed from the stern on Monday.
This week iwi spokesman Buddy Mikaere said he hoped the trip was the first of many to remove the rest of the Rena from Astrolabe Reef.
"As long as it's on its way but we want them to take the whole bloody thing."
Mr Mikaere said the move already was testament that the rest of the ship could be moved as well. "It shows us it is technically possible to take big chunks away from the reef. Just keep going."