The Hokitika Holiday Park, purchased last year by Westland Milk Products, will be bowled to make way for further expansion of the dairy factory site.
It will become car parking for staff.
Westland Milk chief executive Rod Quin yesterday confirmed the company was working through the change of land use permissions with the Westland District Council.
It would also be speaking to nearby residents on its plans, which had been "no secret".
"Staff and the community in general have known for some time that the camp is to be closed," Mr Quin said.
"This will allow the site to be used for car parking in order to meet health and safety and District Plan requirements for the Westland site, and in particular the development of the drier 7 complex."
The Hokitika Motorcamp and Store were established in the early 1960s by former Hokitika mayor Henry Pierson to take advantage of the opening of the Haast Pass highway. The site was on the main south highway until the Hokitika Bridge opened in 1991.
Last year the site was sold to Westland Milk Products after objections from the camp owners, Ron and Jan Heward, to the $114 million nutritionals plant being built directly across the road.
The Hewards had owned and operated the camp since 1985.
They retained top Wellington law firm Chen Palmer to fight the expansion plans, saying in their formal submission that the latest expansion directly across the road from the camping ground would "kill" their business.
However, just before it was due to go to a hearing, they withdrew their opposition and signed approval for the application.
The Hewards said in the document they had been in "discussions" with the company and their concerns "have been satisfactorily resolved".
Another objector, Alida van der Lem, of Kaniere Road, signed a similar document, withdrawing her objection and approving the application.
Mr Heward told the Guardian at the time they had come to a "private arrangement" with the company.
The holiday park has since continued to be run by the dairy company as normal.
However, its website now says it will not be accepting any bookings beyond November.
The Guardian was contacted anonymously this week after Opus consultants were seen marking out car spaces at the holiday park.
Westland District Council chief executive Tanya Winter confirmed district planner Rebecca Beaumont had met with the dairy company's Chris Pullen in a pre-application meeting on Tuesday.
She had met with Mr Quin earlier this year as a general catch-up on the company's proposed future development, which included the holiday park and car parking.
Mr Quin said both Westland Milk Products and the council had agreed that the proposed land use did not represent a significant change in effect from the nature of use that the campground involved, and was unlikely to need a notified consent application.
"However, this still has to be decided after lodgment of the application and formal assessment by council. There might be specific parties considered affected," he said.
The company would be visiting neighbouring properties to talk them through the company's plans.
"The fact is that the motor camp generated traffic and noise that is little different to what we expect will emanate from the land's use as a car park," he said.
He did not expect that the loss of the motor camp would seriously impact on Hokitika's tourism and accommodation business.